Integrated Report 2023

2-3-1, Minato Mirai, Nishi-ku, Yokohama-shi,
Kanagawa 220-6001, Japan
Tel: +81-45-682-1111
Fax: +81-45-682-1112
https://www.jgc.com/en/

JGC Report
Enhancing planetary healthFacing a critical phase forsustainable growth
Providing "realistic solutions" tofurther boost corporate value

1

JGC Report 2023

Fiscal 2023 marks the third year since embarking on the JGC Group's medium-term businessplan "Building a Sustainable Planetary Infrastructure 2025 (BSP 2025)." Over this time, the market
environment that the JGC Group is involved in has undergone unforeseen changes, driven by thesudden increase in demand for LNG on the back of energy security and the rapid generation ofmarkets in the sustainability sector toward low-carbon and decarbonization.
The JGC Group had leveraged its technical expertise to provide "realistic solutions" for responding
properly to these changes in the market environment—today, we are aware that we are facing a
critical phase for achieving sustainable growth.
We are committed to further enhancing corporate value toward accomplishing the goals of "BSP2025" and achieving the purpose of "Enhancing planetary health" as raised in our long-term management vision, "2040 Vision."JGC Report 2023

2

Management Messages

Enhancingplanetary
healthThe JGC Group’s purpose is defined to reflect its message of creating a more prosperous
future by pursuing the intertwined health of humans and the earth.

Editorial Policy
Purpose of This Report

Information Provided

The purpose of the JGC Report, which was first published in

The JGC Report summarizes and presents the most relevant

2015, is to explain to stakeholders how the JGC Group works

information related to the JGC Group and society. For detailed

to generate sustainable growth and increase corporate value

and comprehensive financial and non-financial information

over the medium to long term. JGC uses this report as a tool toabout the Group, please visit the JGC website.

communicate with stakeholders as part of its efforts to deliver
sustainable growth through continuous, constructive dialogue.

Forward-Looking Statements
Data and forecasts disclosed in this report are based on judg-

JGC Group's Growth Strategy

Reinforcing Management
Reinforcing Management
Results of Value Creation
Resources for Continuous Growth: Resources for Continuous Growth:
Corporate Governance
Sustainability Management

Contents
Reinforcing Management Resources
37
for Continuous GrowthManagement Messages

5

Message from the Chairman and CEO

5

Message from the President and COO

9Sustainability Management

39

Message from the CFO

13Climate Change Initiatives

41

Human Capital Initiatives

45

IP / Intangible Asset Initiatives

59

JGC Group's Growth Strategy

17

Respect for Human Rights in Supply Chains

61

JGC Group at a Glance

19

Occupational Health and Safety

63

JGC Group’s Value-Creation Mechanism

21

Quality Management System

64

Strengths Supporting Value Creation

23

Corporate Governance65

JGC Group Materiality

25

Risk Management

75

Compliance

77

Stakeholder Engagement

79

Results of Value Creation

81

Financial Highlights

83

ESG Data Highlights

85

Consolidated Segment Information

86

Operational Review: Total Engineering Business

87

Operational Review: Functional Materials
Manufacturing Business

90

Analysis of Performance and Financial Position

91

Consolidated Financial Statements

95

Group Companies

102

Long-Term Management Vision "2040 Vision"and Medium-Term Business Plan "BSP 2025"

27

2040 Vision and Materiality

29

Path for Fulfilling Our Strategy

31

Organizations Covered

ments and information available at the time of publication. The

In this report, "JGC Group" and "the Group" refer to JGCCompany provides no guarantee for targets, forecasts, andStock Information

103

Holdings Corporation and its subsidiary operating companies.

earnings projections, which may change due to a range of

Outline of JGC

104

factors.
Period Covered
In principle, the report covers the period from April 2022 toReference Guidelines

March 2023 (fiscal 2022), but also includes information related

JGC Report 2023 was compiled referring to the disclosure

to events from April 2023.

framework of the IFRS Foundation and the World Intellectual
Capital Initiative (WICI), as well as “Guidance for Collaborative
Value Creation” of the Ministry of Economy, Trade and Industry(METI).

3

JGC Report 2023

JGC Report 2023

4

Management Messages

JGC Group's Growth Strategy

Management Messages

Message from the
Chairman and CEO

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

CEO Message
Critical phase for achieving sustainable growth
Masayuki Sato
Representative Director, Chairman, and Chief Executive Officer (CEO)Has worked in finance and accounting since joining JGC in 1979, overseeing finance for the Middle East, North Africa,
Southeast Asia, and CIS projects.
Appointed as a director in June 2010, CFO and Managing Director, Senior General Manager of the Corporate
Administrative & Financial Affairs Division in July 2011, and Executive Vice President in June 2012. Has served as
Representative Director and Chairman as of June 2014 and additionally CEO as of June 2017.

wake of the Russia-Ukraine situation, and there was major

plant in Japan, resulting in a high ¥824 billion in new con-for high-performance functional materials, and establishingprogress with new construction plans and expansion plans

tracts for the Total Engineering Business. The business had

future engines of growth. This is bringing about a shift in ourfor existing LNG plants in the U.S., the Middle East, Africa

significantly higher sales and earnings compared to fiscal

business portfolio, which had been centered on the oil and

In JGC Report 2022, the previous fiscal year's integrated

and other regions. As energy demand recovers in the wake

2021 levels, as a result of ensuring proper risk management

gas sector, toward the five business areas set for expansion

report, I outlined the fact that we are facing the challengeof COVID-19, efforts are being made for looking into restart-

for projects already underway in Japan and overseas, as wellin the 2040 Vision.

of having to address the two seemingly contradictory issues

ing LNG plans that had been temporarily put on hold, while

as market recovery in the Functional Materials Manufacturing

Meanwhile, we secured ¥824 billion in contracts in fiscalof responding to today's growing global demand for energy

oil and gas development plans are starting to take shape inBusiness. Above all, net profit attributable to owners of the2022, and set our fiscal 2023 forecasts to net sales of ¥800

and accelerating decarbonization efforts toward building a

Middle East oil-producing countries in response to growing

parent recovered to ¥30,665 million, following low figures inbillion, operating profit of ¥38 billion and net profit attributablesustainable society.

Significant boost to ROE in fiscal 2022

demand for energy. There are signs of new production plansfiscal 2019 and 2020, and the net loss posted in fiscal 2021,

to owners of the parent of ¥32 billion. This means we are well

As we work toward enhancing the five business areas

for hydrogen/fuel ammonia and sustainable aviation fuelwhile return of equity (ROE) improved to 7.8% from the lowon the way to achieving the financial targets of BSP 2025 of("Energy transition," "Healthcare & life sciences," "High-(SAF) becoming evident worldwide like the U.S., Australia

levels posted over the past several years.

net sales of ¥800 billion, operating profit of ¥60 billion andperformance functional materials," "Circular economy," andand the Middle East, and progress has also been made here

"Industrial & urban infrastructure") required by society andin Japan.

Setting our sights on achieving thefinancial targets of BSP 2025

We are anticipating ROE of around 7.8% for fiscal 2023,
which also brings the BSP 2025 target of 10% into sight.

by industry as set forth in the 2040 Vision, through the pro-With such international moves to respond to growing

cesses for achieving a sustainable society, I outlined how theenergy demands and accelerate efforts toward decarboniza-

JGC Group, based on its technical expertise, needs to be antion, the JGC Group fulfilled its role of playing an active roleequal partner—a collaborator—providing realistic solutions,

toward achieving these plans as a corporate group providing

Fiscal 2023 marks the third year of the BSP 2025 medium-the long-term management vision, 2040 Vision, and we arewhether to countries, clients, or a range of other stakehold-truly realistic solutions.

I feel that we are fulfilling our role of "Enhancing planetary health" that the JGC Group redefined as purpose interm business plan covering the five-year period from fiscal

now approaching a critical phase for achieving sustainable

Specifically, the JGC Group secured contracts including

2021 to 2025, positioned as the first phase of the 2040

growth.

Looking back at fiscal 2022, I felt that it was a year marked

a floating LNG (FLNG) plant in Malaysia, an ethylene plant in

Vision. Over the past two years, we have made steady

The current issues faced worldwide are those for whichby significant moves worldwide toward addressing these two

the U.S., and a gas and oil separation plant in Saudi Arabia,

progress toward the three key BSP 2025 strategies of trans-

the JGC Group's 2040 Vision set out to develop solutions—pressing issues. Demand for LNG development soared in theas well as a hydrogen production plant and SAF production

forming EPC operations, expanding manufacturing businessbalancing energy stability with decarbonization and reducing

ers who face these contradictory issues.

5

net profit attributable to owners of the parent of ¥45 billion.

JGC Report 2023

JGC Report 2023

6

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Management Messages

Message from the Chairman and CEO
the environmental impact of resource consumption. In orderto achieve steady, ongoing growth, I firmly believe that the
JGC Group needs to significantly increase corporate value

Resources for sustainable growth—Further strengthening human capital

into the future, as an engineering company wholeheartedly

models that had been centered on the EPC Business underthe 2040 Vision. With this in mind, we are currently clarify-

Wrapping up

ing the required human resources portfolio and developing
diverse human resources training policies and specific train-

I have worked for the JGC Group for more than 40 years,ing programs.

since joining the Company in 1979 and being appointed

committed to expanding the five mentioned business areas,

In addition to pushing ahead with business strategies by

diversifying its business models, and providing realistic solu-

expanding business areas and diversifying business models,

We are also working to ensure those human resources

tions with its technical expertise, on the course charted in thethe JGC Group recognizes that reinforcing management

remain highly motivated, developing a workplace environ-2040 Vision.

resources that support these strategies is essential for

ment that brings growth in the human resources required

The JGC Group has long been engaged in the EPC

achieving sustainable growth.

director in 2010, as well as in my capacity as Chairman and
CEO starting from 2017.

by the Company. In fiscal 2022, the personnel system wasBusiness for plants in the oil and gas sector as its core opera-

increases in demand for LNG, and markets in the sustainabil-

I view strengthening human capital as the most importantchanged to one based on the Pay for VALUE concept, wheretions in the Total Engineering Business, and has achieved

ity sector are being developed at a rapid pace to create a sus-

issue to address among management resources that have aeach individual's compensation reflects their roles and job

close to consistent growth by constantly expanding markets

tainable society. Instead of viewing any unexpected changes

major impact on achieving sustainable growth for the JGC

responsibilities, and in fiscal 2023, compensation of employ-and diversifying our targeted plants. I view the key corpo-

like these that may arise going forward—or changes thatGroup. Our existing efforts toward improving human capitalees at JGC Holdings Corporation, JGC Corporation and JGC

rate values created by the JGC Group to be its contributions

are more intense than anticipated—as risks that adversely

involved systematic and ongoing training for design engi-

Japan Corporation was increased by an average of 10%.

toward the stable supply of energy, economic growth andaffect corporate value in markets closely associated with theneers and human resources associated with projects, such

We are also making a concerted effort toward inclusion andemployment opportunities in resource-rich countries, and the

JGC Group's business strategies, I feel that it will be vital toas project managers supervising the execution of projects

diversity, enhancing engagement with our employees, andadvancement of human resources.

fully embrace such changes into our business strategies as

under our main Total Engineering Business segment. I am

implementing a wide array of measures to enable diverse

As the world currently moves toward a sustainable society,

opportunities to achieve sustained growth.

confident that these human resources formed the linchpin ofhuman resources to make the most of their own capabilities.

I believe the corporate value that will be generated by thethe JGC Group's prowess in the Total Engineering Business.

I am acutely aware that human capital is the most impor-

JGC Group will vastly and broadly exceed our past corporate

The Russia-Ukraine situation has brought about sudden

Implementing measures will be essential for securing moretant management foundation with which the JGC Group canvalue by providing realistic solutions for expanding the fiveskilled human capital to expand into a broad range of businessachieve sustainable growth, and I intend to make further

business areas that includes energy transition, as a corpo-

areas beyond the oil and gas sector and diversifying business

improvements in this area going forward.

rate group contributing to a healthy future for people andthe planet by redefining the purpose of the 2040 Vision as"Enhancing planetary health."
Looking back over the past 95 years of the JGC Group,
I strongly feel that fiscal 2023 represents a critical phase for
the JGC Group in achieving sustainable growth for the future
as a corporate group. As CEO, I am committed to fulfilling
my responsibilities with the goals of sustainable growth andfurther increased corporate value.
I sincerely request the continued support of all ourshareholders.

7

JGC Report 2023

JGC Report 2023

8

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Management Messages

Message from the President and COO

COO Message
Changes in the market environment
considered to be a tailwind
Tadashi Ishizuka
Representative Director, President and Chief Operating Officer (COO)
Managed numerous projects outside of Japan after initially working in the Domestic Project Construction Divisionin 1972. Appointed Managing Director and Senior General Manager of the Project Operation Services Division inJune 2008, Senior Managing Director in 2010, Executive Vice President and Board Director in June 2011, Senior
Executive Vice President and CPO in February 2017, President and COO in June of that year.

Overview of fiscal 2022
— Second-highest level of newcontracts recorded

beginning of the year. In particular, we achieved an 11.0%

three key BSP 2025 strategies—transformation of EPC

for use in newly secured projects going forward. In pharma-

gross profit ratio—which indicates the potential profitability ofoperations, expansion of manufacturing business for high-ceuticals where there remains a high level of capital invest-

an engineering company—two points higher than the 9.0%

performance functional materials, and establishment of future

ment, we secured numerous contracts in fiscal 2022 andforecast at the start of the fiscal year. This was due to factors

engines of growth—in order to achieve the numerical targets

established a strong position as an engineering company

that included the impact of a weaker yen, greater profitabilityof BSP 2025, as well as expanding the five business areas

specializing in sectors where strong demand is anticipated

As recovery of the post-pandemic resources market became

for projects underway in the Total Engineering Business, andand diversifying business models. I commend the results wein the future, such as vaccines and biopharmaceuticals. In

evident, we made sure to tap into the increasing capital

the recovery of demand in the chemical catalyst and finehave accomplished.

light of this, the construction project for a facility for the man-investments by oil majors and national oil companies in oil-chemical markets in the Functional Materials Manufacturing

For the transformation of EPC operations, we establishedufacture of small and mid-size molecule drugs for Chugai

producing countries, and secured contracts including a gas

Business. Ever since I was appointed President, I feel thatJGC INDIA EPC PRIVATE LIMITED in August 2022 as a new

Pharmaceutical Co., Ltd. was selected as the Category

and oil separation plant in Saudi Arabia, an FLNG plant in

the seeds of transformation have well and truly taken hold inoperations center in Chennai, India, and added staff with aWinner for Innovation in the Facility of the Year Awards of

Malaysia, and an ethylene plant in the U.S. As a result, we

the Total Engineering Business. This has been achieved byview to increasing capacity to work on EPC contracts that

the International Society for Pharmaceutical Engineering

recorded the second-highest level of new contracts ever incarefully examining and analyzing the risks of target projects

respond to the sudden growth in the market for LNG and(ISPE), reinforcing our position as a top contractor in thefiscal 2022 for the Total Engineering Business, amounting

and selecting those guaranteed to deliver profits, as well asother plants. From the stance of enhancing our EPC execu-

pharmaceutical sector.

to ¥824 billion—around 2.5-fold that of fiscal 2021—madeensuring the utmost risk management for projects that havetion capabilities, the use of our proprietary J・・
I ModuleTM

To address the objective of "expansion of manufactur-

up of ¥696 billion in the overseas sector and ¥128 billion in

been secured. Going forward, we will continue monitoring(JGC Integrated Module) construction method in the LNG

ing business for high-performance functional materials" thethe domestic sector, against target contracts of ¥840 billion.

the various developments related to our projects, and con-Canada Project currently in progress in Canada was suc-holding company JGC Holdings Corporation appointed

Fiscal 2022 was also the year we made a concerted effort

tinue focusing on curbing project risks to the extent possible.

cessful for completing the modules forming part of thea new Chief Manufacturing Officer (CMO) and highlighted

project. With an increase in projects calling for modular con-our commitment to the Functional Materials Manufacturing

struction anticipated in the future, I feel that our advanced

Business. We developed systems for rolling out measures

EPC execution capabilities left a strong positive impression

such as rapidly made capital investments in this businessamongst our customers. Fiscal 2023 marked the first yearthat is prone to significant changes. In the Catalysts andto carve out a market in the sustainability sector such ashydrogen/fuel ammonia and SAF, where we secured orders
for EPC projects in Japan, as well as feasibility studies (FS)and front-end engineering and design (FEED) contracts

Steadily engaging in key BSP 2025
strategies

overseas.

9that EPC DX was rolled out of full-scale deployment, and it

Fine Chemicals sector, we began full-scale investments in

In terms of business performance, both net sales and prof-

During fiscal 2022, the second year of the medium-term

is already being used in projects underway in regions such

fiscal 2023 by acquiring new land in Fukuoka and Niigata

its for each quarter exceeded the business forecasts at thebusiness plan BSP 2025, we continued to work on theas Canada, Iraq and Saudi Arabia, with further plans in place

prefectures with a view to achieving growth by 2030. In FineJGC Report 2023

JGC Report 2023

10

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Management Messages

Message from the President and COO
Ceramics sector, we made decisions on capital investments

capabilities of the JGC Group. With many requesting oursources of income by expanding applications. We will be

Japan Corporation, as part of ongoing initiatives for thefor increasing production of high thermal conductivity siliconcooperation to achieve their plans, I gained a keen sense ofrevising production plans and systems for fine ceramics insustainability sector. New developments that are expected

nitride substrates for EV power semiconductors, and also

anticipation going forward.

anticipation of recovery in the semiconductor market fromto have a significant impact on the status of future manu-acquired land for a new plant in Miyagi Prefecture. In thisIn Sustainable Solutions, we are aiming to secure FEED

fiscal 2024. With the continuing strong demand for highfacturing industries include biomanufacturing. With thisway, we are moving ahead with capital investments with anand other contracts for hydrogen/fuel ammonia projects

thermal conductivity silicon nitride substrates for power

mind we began operations of the Integrated Biofoundry®

eye firmly on meeting growing demand in the future.

planned by Japanese trading companies and local subsidiar-semiconductors, we will be pressing ahead with our plans tobusiness together with Bacchus Bio Innovation, Co., Ltd.

increase production capacity as scheduled.

Biomanufacturing is considered an area that could become

Toward "establishing future engines of growth," we accu-

ies in regions that include the U.S., Australia, the Middle East,

rately identified the rapid pace of growth of the market inand Southeast Asia, and I hope to leverage these orders to

Fiscal 2025 will be the final year of BSP 2025 and, tothe hydrogen/fuel ammonia and SAF sectors, and played

secure EPC contracts in fiscal 2024 and beyond. For Facility

achieve the set numerical targets, we recognize that it willa significant role as the leader in these sectors, by secur-

Solutions, we are looking to secure contacts for renewable

first be essential to achieve the target orders and earnings

We will continue to carefully monitor changes in the market

ing a contract for the blue hydrogen and ammonia produc-energy, semiconductors and chemical-related projects in theforecasts for fiscal 2023. We will be doing our utmost toenvironment of our company, and we will implement suitabletion pilot facility for INPEX CORPORATION, establishing

Middle East and the U.S. Following on from fiscal 2022, we

accomplish these goals.

measures with a sense of urgency.

SAFFAIRE SKY ENERGY LLC with Cosmo Oil Co., Ltd. andare aiming to secure additional contracts for pharmaceuticals

Revo International Inc. to start the SAF project, as well as

plants, hydrogen/fuel ammonia facilities and battery projects

securing a contract for a SAF production plant planned atin the domestic EPC business.

fore planning to ramp up investments in this area.

Wrapping up

the Sakai Refinery of Cosmo Oil Co., Ltd. Overseas. In fiscal

Forecasts for fiscal 2023 are net sales of ¥800 billion,

2023, we secured a contract for a hydrogen production plantgross profit of ¥68 billion, operating profit of ¥38 billion,

in Australia planned by Sumitomo Corporation and otherordinary profit of ¥45 billion, and net profit attributable topartners, helping Japanese trading companies to achieveowners of the parent of ¥32 billion. We recorded new con-

As COO, I am aware that the JGC Group needs to implement

putting forth every effort toward achieving the fiscal 2023

sustainable projects planned for overseas.

tracts exceeding ¥824 billion in fiscal 2022, and as net sales

measures with a sense of speed to respond to changes inorder target and earnings forecast, while also viewing

are expected from these projects, we anticipate significantly

the market environment, such as the sudden growth in thechanges in the market environment of the JGC Group as anhigher sales compared to fiscal 2022, with increased profits

market for plants and the rapid pace of development ofimpetus for us. I will be implementing measures in a speedy

forecast for each stage with the exception of ordinary profit.

markets in the sustainability sector. Accordingly, we havemanner to achieve the numerical targets of BSP 2025 andMeanwhile, the gross profit ratio is forecast to drop 2.5

made every effort to increase our project execution capacity

pressing ahead with business strategies.

points to 8.5% from the 11% recorded in fiscal 2022. It isin response to the increase in projects following the sudden

More than simply focusing on fiscal 2025, the final year

possible that this figure will rise going forward owing to fac-

growth in the market for plants, as well as continuing toof BSP 2025, I will be fulfilling my responsibilities by setting

During fiscal 2023, we will continue to build on efforts
toward the three key strategies.

Fiscal 2023 order target andearnings forecast

We recognize that fiscal 2023 is a pivotal year for the JGCGroup for achieving sustainable growth. As COO, I will betors such as greater profitability of projects underway and theappropriately allocate resources in the sustainability sector

my sights even further ahead. Thank you for your continued

We are targeting the same ¥800 billion level of orders as inweakening yen; however, the transient effects of employee

where markets are being generated at a rapid pace while

support.

fiscal 2022 for the Total Engineering Business in fiscal 2023,

benefits in the Total Engineering Business and worsening

coordinating efforts with industry peers.

made up of ¥620 billion for the overseas EPC Business andsemiconductor market conditions in the Functional Materials

We implemented measures to increase our project execu-¥180 billion for the domestic EPC business, based on the

Manufacturing Business are some of the factors behind thetion capacity, including personnel increase at the afore-

continued strong appetite for investment by oil majors andforecasted drop in the profit ratio.

mentioned JGC INDIA EPC PRIVATE LIMITED located innational oil companies in oil-producing countries, as well as

In the Total Engineering Business, we will continue to exam-

Chennai, India from fiscal 2022. Plans are in place to raise

progress with plans for hydrogen/fuel ammonia and SAF in

ine and analyze the risks of target projects and move ahead

the present approximate 400 staff to around 1,000 as soon

the sustainability sector in Japan and overseas, and the ongo-

with selecting contracts, as well as ensure the utmost risk

as possible. Following on from the alliance we forged withing capital investment forecast in the pharmaceuticals sector

management for secured projects in order to generate profits.

Toyo Engineering Corporation in fiscal 2021 in the hydrogen/Despite less favorable market conditions for general-

fuel ammonia sector in anticipation of market changes and

For Energy Solutions of the overseas EPC business, we

purpose chemical catalysts and semiconductor manufactur-

growth in the sustainability sector, in fiscal 2022 we con-are aiming to secure LNG contracts in regions such as theing equipment that spearheaded business performance included another alliance with Toyo Engineering Corporation

Middle East and Africa, with a primary focus on the LNG

fiscal 2022, the net sales results for the Functional Materials

in the domestic SAF sector as part of measures to improvesector, where demand is soaring.

for vaccine production and biopharmaceuticals in Japan.

11

Making every effort to build aframework capable of responding tomarket changes

a future growth engine for our company, and we are there-

Manufacturing Business is forecast to increase slightly incompetitiveness in securing orders and reinforce project

I attended "LNG2023," the largest global LNG industry

fiscal 2023 thanks to other product groups, but operating

execution capacity.

conference and exhibition held in Vancouver, Canada fromprofit is expected to remain flat throughout the year. In the

To allocate suitable ongoing resources to the sustain-

July 10 to 13, where I had the opportunity to meet with

Catalysts sector, we will expand our business to overseas

ability sector, in fiscal 2022 we established the "Sustainable

numerous clients from oil majors and national oil companies

clients, with a focus on oil-related catalysts for which there

Solutions" division to serve the sustainability sector ofin oil-producing countries. Clients planning investments in

is strong demand, as well as the advanced development of

the overseas EPC operating company JGC Corporation.

LNG developments to tap into the soaring demand for LNG

low-carbon and carbon-free products. In the Fine Chemicals

Further, we established the Renewable Energy Solutions

highly praised the technical expertise and project executionsector, we will accelerate our efforts toward diversifying

department at the domestic EPC operating company JGC

JGC Report 2023

JGC Report 2023

12

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Management Messages

Message from the CFO

CFO Message
Driving financial strategies aimed at further
enhancing capital efficiency
Kiyotaka Terajima
Director, Senior Executive Vice President, and Chief Financial Officer (CFO)
After joining JGC in 1981, established business alliances and developed contracts for domestic and overseas projects in the
Legal Department. Appointed Executive Officer and Deputy General Manager of the Corporate Administrative & Financial Affairs
Division in 2014, Director, Executive Officer, and Senior General Manager of the division in 2016 (Senior Executive Officer in 2017),
Executive Vice President and CFO in April 2018, and Senior Executive Vice President in April 2020.

Overview of fiscal 2022

the business forecasts at the beginning of the year, with sig-

In BSP 2025, the numerical target for fiscal 2025 had beennificantly higher sales and earnings achieved compared to

set at net sales of ¥800 billion, but there is the possibility that

fiscal 2021 levels.

Utilizing capital in an effective manner

we will exceed this figure based on the potential growth ofCash and deposits as of March 31, 2023 was ¥332.9 bil-

In fiscal 2021, we formulated the 2040 Vision and com-

Going forward, we will continue to press ahead with athe future market for plants. Accordingly, we are aware of thelion, an increase of ¥44.7 billion from the beginning of themenced the medium-term business plan BSP 2025 as thesteady financial strategy while monitoring changes in thegrowing need to maintain an equity ratio of 50% or higher by

year due to collecting receivables following the settlement of

first phase covering the span from fiscal 2021 to 2025. Sincemarket environment, in order to achieve medium- to long-

further concentrating on our equity capital.

disputes related to projects completed in the past.

then, I have been actively focusing on my responsibility ofterm growth for the JGC Group.

implementing growth strategy investments for boosting net
profit attributable to owners of the parent, considered crucial
for maintaining a sturdy financial foundation, strategic capi-

The normal practice in our core operations of Total
Engineering Business is to allocate cash received as

Equity ratio

Equity capital conditions

advances from clients to projects that are already underway,

(%)

60.0

tal policies for enhancing capital efficiency, and increasing

59.0

ROE deemed essential for keeping the Total Engineering

We believe that maintaining sound finances is essential for

58.0

Business as the main business. During fiscal 2022, I feel that

the Total Engineering Business, one of the JGC Group's core

57.0

we moved ahead with effective financial strategies in all ofbusinesses, for business continuity and earning client trust

56.0

these aspects.

meaning the amount of capital on hand varies depending

59.4
57.7

on the contract conditions or degree of progress of current

58.2

projects. To ensure steady operation of current projects
even when subjected to changes in external factors such
55.8

55.7

as sudden turmoil hitting financial markets, we ensure thatfrom the standpoint of ensuring risk resilience, for continu-

55.0

we have working capital of around two months of annual

As resource markets underpinning the Total Engineering

ally expanding business. To achieve this, we are working in

54.0

net sales in addition to the cash received as advances. We

Business showed signs of recovery in fiscal 2022 andline with the approach of maintaining the equity ratio at a0clients began moving ahead in earnest with their capitalstable 50% or higher. The equity ratio as of March 31, 2023

investments, we recorded our second-highest level of new

was 55.7%, as we continued to maintain a sound financial

contracts of ¥824 billion. In terms of business performance,foundation.

view cash exceeding these advances and working capital as
2018

2019

2020

2021

2022

(FY)

being positioned as capital that can be allocated to growthstrategy investments.

consolidated net sales and profits at each stage exceeded

13

JGC Report 2023

JGC Report 2023

14

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Management Messages

Message from the CFO

We utilize cash flows from operating activities in addition
to cash on hand for both expanding existing businesses andToward raising ROE

As CFO, I am seeking to increase ROE by working toward
these key strategies with a credible and tactical financial

growth strategy investments, but in addition to the outlook

greater increase in cash dividends per share.

approach. We are also planning growth strategy investments

With this in mind, in February 2023 we purchased 12

for the business environment and medium-term cash flow,

Capital efficiency is essential for expanding businesses andamount to around ¥200 billion over the five-year span of BSP

million treasury shares totaling ¥20 billion for the first timefinancing with the optimum amount and timing in line withgrowth strategy investments, and we are targeting ROE of2025 from fiscal 2021 to fiscal 2025, and we have alreadyin 20 years, after comprehensively taking into consideration

trends in financial markets is also deemed to be a key option

10% or higher over the medium- to long-term span relative toinvested around ¥32 billion over the two years of fiscal 2021

aspects such as the current state of cash flow from operat-that is available. The main use of proceeds will be invest-

capital costs. For the JGC Group with the Total Engineeringand fiscal 2022. The amount of investment by key strategy

ing activities and future outlook, as well as the future market

ments in SAF, biomanufacturing and high thermal conductiv-

Business as its core area of operations, as mentioned earlier,is around ¥5 billion for transforming EPC operations, aroundenvironment and business outlook. The purchase of treasury

ity silicon nitride substrates for EV power modules, and going

it will be vital to determine ways of increasing profit attribut-¥17 billion for expanding high-performance functional materi-shares is viewed by our Company as a crucial initiative forforward, we will consider interest-bearing debt financing ifable to owners of the parent to maintain further equity capitalals manufacturing, and around ¥10 billion for stabilizing future

shareholder returns akin to shareholder dividends, and wenecessary, similar to the Green Bonds issued in September

while increasing ROE, and there is a priority on maximizing

engines of growth. Together with around ¥68 billion in invest-

will continue examining the feasibility of purchasing treasury

2023.

operating profit, the results of business activities.

ment projects for which decisions have already been made,shares based on the future outlook and cash flow outlook

growth strategy investments will amount to around ¥100

including growth strategy investments.

In fiscal 2021, the first year of BSP2025, we recorded a
net loss attributable to owner of the parent of ¥35.5 billion

Free cash flow(¥ billion)
120

110.7
99.2

100
80

20

Australia, but this rebounded back into the black to the tune

acutely aware of the sudden market changes that haveof ¥30.6 billion in fiscal 2022, leading to a significant improve-occurred after fiscal 2021 when BSP 2025 began—such as

ment in our ROE from -8.8% to 7.8%. A figure of aroundfuture growth in the market for plants and the rapid pace of

7.8% is anticipated for fiscal 2023 based on the businessdevelopment of markets in the sustainability sector. We also

forecasts at the beginning of the year.

invested in projects such as establishing an overseas opera-

40

tion center for increasing our project execution capacity, and35

getting the SAF business off the ground.

30

11.6

under the holding company JGC Holdings Corporation

10

0
-20

The Group Investment and Loan Committee established

(%)

19.3

7.8

8

-7.6

-11.4

2021

2022

■■ Cash flows from operating activities■■ Cash flows from investing activities ■■ Free cash flow

Cash allocation

conducts quantitative analyses that factor in capital costs

7.8

when making investment decisions, and also carefully and

6
(FY)

4
2

1.0

1.3

Cash dividends per share(Yen)
45

5

The Committee also monitors the progress of projects after0

study whether to withdraw from certain businesses.

28.5

15.0

15

based on their potential to lead to future business expansion.

-2

40.0

20

10

investments are made, as part of a system that can properly

38.0

25

cautiously deliberates research and development projects

0

2018

12.0

12.0

2019

2020

2021

2022

2023
(Forecast)

(FY)

-4
-6

Greater shareholder returns

-8
-10

-8.8
2019

2020

Cash

GrowthStrategy
Investments

2021

2022

2023
(Forecast)(FY)

We view shareholder returns as a key management issue
for the Company, and the shareholder return policy seeks a

Shareholder
Returns(dividends)

Working
CapitalJGC Report 2023

Thank you for your continued support.

In selecting growth strategy investment projects, we are

ROE

40

billion.

due to the extraordinary loss recorded for the LNG project in60

15of the parent of ¥45 billion in fiscal 2025, and achieve an even

By expanding the five business areas and diversifying busi-

payout ratio of about 30% of net profit attributable to owners

ness models under BSP 2025, we have set ourselves theof the parent during the BSP 2025 period. Cash dividends

numerical targets of ¥800 billion in net sales, ¥60 billion inare generally once per year, with a minimum annual dividend

operating profit, ¥45 billion in net profit attributable to ownersof ¥15 per share. The Company considers share buybackof the parent, and 10% ROE. From fiscal 2021 that marked

when needed, factoring aspects such as the business out-

the beginning of BSP 2025, we have been working on thelook and state of free cash flow.

three key strategies of transforming EPC operations, expand-

Cash dividends per share were increased due to improve-ing high-performance functional materials manufacturing,ments in business performance after fiscal 2021, the first year

and establishing future engines of growth in order to achieveof BSP 2025. I hope to move ahead with effective financial

these numerical targets.

strategies toward achieving net profit attributable to owners

JGC Report 2023

16

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

JGC Group's
Growth Strategy
The JGC Group has made steady progress toward its
long-term management vision "2040 Vision" defined infiscal 2021 based on "Enhancing planetary health," ourpurpose as a corporate group, as well as toward "BSP
2025," the medium-term business plan spanning the next
five years. Fiscal 2023 marks the third year and mid-pointof BSP 2025. Here, we outline the key issues underlying
the Group's value-creation mechanism and strategies, aswell as progress of BSP 2025 and future policies aimed atachieving our goals.

17

JGC Group at a Glance

19

JGC Group’s Value-Creation Mechanism

21

Strengths Supporting Value Creation

23

JGC Group Materiality
Long-Term Management Vision "2040 Vision"and Medium-Term Business Plan "BSP 2025"

25

2040 Vision and Materiality

29

Path for Fulfilling Our Strategy

31

JGC Report 2023

27

JGC Report 2023

18

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

JGC Group's Growth Strategy
Net sales and operating profit

Net sales by segment (FY2022)(¥ billion)

800

800

JGC Group at a Glance

36.6

480.8

Through business focused on Total engineering and Functional materials manufacturing, the
JGC Group is aiming to realize our purpose in "Enhancing planetary health," and ensuring

433.9
22.8

20

20.6

200

10

0

0

2019

Applicable Plants, Facilities, Products, etc.

LNG (liquefied natural gas), CCS (CO2 capture and storage), petroleum refining, petrochemicals, chemicals, gas processing, crude oiland gas gathering, etc.

30

428.4

20.2

2021

2020

■■ Net sales (Left axis)

Energy Solutions

38

2022

Total Engineering Business(Overseas business)■ Total Engineering
Business■ Functional Materials
Manufacturing
Business■ Others

1.2
7.9

2023

(FY)

(Forecast)

Operating profit (Right axis)

Typical Products andServices

Business Model

Provision of feasibility studies (FS), front-end engineering design(FEED), and EPC projects for plants and facilities
Floating LNG plant (Malaysia)

Sustainable Solutions
SAF (sustainable aviation fuel), hydrogen/fuel ammonia, nuclear
energy, etc.

Feasibility
Study

Front-endEngineering
DesignEngineering

Procurement

Construction
Commissioning
Ammonia synthesis pilot project facility(Fukushima)

Facility Solutions
Industry related with semiconductor and storage batteries, data
centers, LNG receiving terminals, transportation infrastructure, etc.

Maintenance(Domestic business)

Domestic Sector
Pharmaceuticals, healthcare, SAF, hydrogen/fuel ammonia, chemical
recycling, petroleum refining, petrochemicals and chemicals, nuclear
energy, etc.

6,103

Provision of daily maintenance and shut-down maintenanceservices mainly for oil refinery and petrochemical plants in Japan
Project Management Consulting (PMC)

JGC Japan
Corporation

Number of
Employees*

EPC business (Engineering, Procurement, Construction)

Project execution flow

JGC Corporation

(%)

90.9

continued growth of corporate value.

Main Operating Companies

40

606.8

600

400

(¥ billion)

Pharmaceutical plant (Shizuoka)

Provision of consulting service supporting the developmentof plants and facilities, by leveraging extensive EPC-related
knowledge and track record to mediate between clients andcontractors
Hospital (Saitama)

Functional Materials
Manufacturing
Business

JGC Catalysts andChemicals Ltd.

Japan Fine Ceramics
Co., Ltd.

Catalysts and Fine Chemicals Sector
Catalysts used in petroleum refining, chemicals, and environmental
conservation, and fine chemical products used as materials in semiconductors, IT/electronics, optics, cosmetics, and other applications

Research and development, planning, and manufacturing of
catalysts, fine chemicals, and fine ceramics products
Oil refining catalysts

Business execution flow

Silica sol for antireflective film on
flat-screen TVs

1,013

Fine Ceramics Sector
Ceramic materials for semiconductor, automotive, telecommunications, industrial, medical, and aerospace applications

R&D

Marketing

Manufacturing

Sales
Metal-matrix composites

Consulting, Licensing, Business Participation, Digital Platforms

OthersJapan NUS Co., Ltd.,
etc.

Energy and environmental consulting, etc.

Consulting services such as various studies, analyses andassessments, and production support, business participation invarious sectors, etc.

447

* As of March 31, 2023. Does not include JGC Holdings, employees (313) or temporary staff in each segment

19

JGC Report 2023

JGC Report 2023

20

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

JGC Group's Growth Strategy

JGC Group’s Value-Creation Mechanism
The JGC Group is leveraging its unique strengths
developed from its roots as an engineering company,
to fulfill its purpose of "Enhancing planetary health."
Social issues to be addressed have been identified asmateriality (priority issues) in line with the "Basic Policy
for Sustainability" formulated as its purpose, and isdeveloping and implementing short-term and mediumto long-term strategies in order to resolve these issues.
We are also continuing to work on strengthening ourmanagement foundation to ensure that we are able toachieve these strategies.

Purpose

Basic Policy for Sustainability

Enhancing planetary health

IdentificationJGC Group Materiality
E

S

Cultivatedstrengths

G

Fulfilling Our
Purpose• Societies in harmony with environment
Materiality to address through business activities

Materiality to achieve as a result of business activities• Working with local communities around the world• Energy access• Human rights, employee motivation• Quality of life

Improve Corporate Value

Creating economic value• Corporate governance, risks management

Revenue growth
Strategy for Developing Solutions

Vision2040 Vision, Our Long-Term Management Vision

Total Engineering
Business

Medium-Term Business Plan (Fiscal 2021 to 2025)

Functional Materials
Manufacturing Business

OthersTechnical
expertise

Management
capabilities

Demonstrate
the Life-cycle
engineering

Five business areas to be addressed to improve planetary healthThrough materials, helping
to shape a more prosperous
future for people and the Earth

Highperformance
functional
materials

Riskmanagement

Through medical care andhealthcare, contributing tohuman well-being

Establishing a stable energy
supply and decarbonization

Makingwidespread useof environmentallyconscious
resources a reality

Energytransition

Establishingenvironmentallyconscious
industrial & urban
infrastructure

Achievement
Solving social issues

Healthcare &life sciences

Health of Earth, Health of Humans

Industrial &urban
infrastructure

CirculareconomyHealth of Earth

Health of Humans

Medium-Term Business Plan (Fiscal 2021 to 2025)

Sustainability management
Climate Change Initiatives

Human Capital Initiatives

IP / Intangible Asset Initiatives

Corporate Governance21

JGC Report 2023

Respect for Human Rights
in Supply Chains

Risks Management

Occupational Health and Safety

Quality Management System

Compliance

JGC Report 2023

22

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

JGC Group's Growth Strategy

Strengths Supporting Value Creation
reinforced through interaction and further building on experiences and knowledge. We will continue to reinforce our strengths and apply themto business activities to enhance value creation at the Group.

Ever since the foundation in 1928, the JGC Group has continued to grow through corporate transformation. Our four unique strengths of"Vision," "Technical expertise," "Management capabilities," and "Risk management" developed through these transformations have been

Vision• Anticipating external environmental changes and future market needs, and achieving corporate transformation• Leading and coordinating partners, vendors, and subcontractors as projects are executed• Collaborating with and guiding diverse stakeholders to create new business

Foresight originally led to the founding of the JGC Group, in expectation of changes in domestic energy demand and supply.
Since then, the Group has continued to grow by constantly anticipating external environmental changes and social and industrial
needs to expand our segments and global business areas, diversify business models, and advance project execution.
This Group strength of foresight suggests what the future may hold and enables agile corporate transformation as we discern
occasional changes and adjust expectations accordingly. It will be increasingly valuable in the turbulent modern market environment and will drive sustained growth in times to come.

Management capabilities—for project management in particular—are a core competency of the JGC Group as an EPC-focusedenterprise. We efficiently manage diverse project resources with an original project management system to complete plants andfacilities on time, on budget, and at the level of quality required by clients.

Social andindustrial
needs

Flexiblemodifications

VisionForecasting

Materials andequipment

External
environmental
changesHuman
resources

Expanding target regions

Construction
machinery

Advancing project execution

Technology

BudgetAchievingproject goals

Applying diverse project resources

Expanding business sectors

Project goals

Funding

Diversifying business models

Transformation

Management
capabilities

Optimization
Schedule

Information

Quality

Original project management system

Background
Background• Advent of the age of oil: At a time of great industrial restructuring in the 1930s, JGC anticipated the leading role oil would playas an energy source in Japan.
• Global energy market trends: A trend that emerged in the mid-1960s was for oil-producing countries to develop their own
resources. Soon, the JGC Group moved in markets such as South America, North Africa, and Southeast Asia as the next areasfor expansion.
• Interdisciplinary application of energy plant process engineering, further expansion: Business area expansion is possible
by applying technical expertise gained in designing energy plants—used in applications such as nuclear power, pharmaceuticals,
nonferrous refining, and renewable energy—to design plants and factories in other promising areas where this expertise is relevant.

Plant / facility design

Project execution
 unctional materials
F
manufacturing
Technical integration
Open innovation

23

JGC GroupStrengths• Techniques / technologies for plant and facility design, and project execution• Development and manufacturing of high-performance materials

The JGC Group's technical expertise supports the foundation of both the Total Engineering Business and Functional
Materials Manufacturing Business.

Management
capabilities

VisionTechnical
expertise• Process engineering• Detailed design engineering, such as mechanical (piping, equipment, civil / structural, electrical / instrumentationand control, structural, IT, etc.)• Project management (managing costs, schedules, resources, and other elements)• Modular construction and other construction methods• Nanoparticle preparation• Nanoparticle alignment control• Nano pore structure control• Macro structure control
Plants and facilities form an organic whole that integrates many technologies in complex ways. The JGC Group's
integration technology provides the ability to integrate these technologies and bring facilities to life.
Acquiring unknown technologies by partnering with other companies that have promising technologies forentering new segments.

• Anticipating risks, planning suitable countermeasures, and reliably implementing them
• Minimizing and overcoming unexpected risks that arise
Riskmanagement

Risk
management

With recent large-scale projects, changes in individual project profitability may greatly affect overall corporate
profit or loss. We recognize that suitably addressing risks is essential in managing projects, and accordingly, allteam members follow a risk management flow applying our original project management system and methods to
respond to a variety of project risks for each role fulfilled and in each phase.

Risk management flow
Prediction and identification of risk areas
Risk profilingTechnical
expertise• Establishment of integrated project management: When Idemitsu Kosan awarded JGC a lump-sum EPC contract for their
Tokuyama Refinery in 1956, Japan’s first large-scale “grassroots” refinery project was completed in just 10 months. Attained thestatus of a general contractor, managing entire projects from design to procurement and construction.
• Advanced project management system: An original project management system was deployed in full scale in the Kuwait
refinery upgrading project in the 1980s for rationally and scientifically controlling project resources. The system is at the heart of
the JGC Group's management capabilities.

Identification of risk areas based on the risk area categories

Qualitative and quantitative risk assessment
Grading of identified risk areas by evaluating impacts
if risks are actualized

Risk response categories
Elimination

Sharing

Example: Changing contract terms

Example: Founding of a consortium

Avoidance

Retainment (conversion into costs)

Example: Preventing risks from
actualizing through active responses

Example: Insurance and appropriationof contingency funds

Decision on responses to risk areas

Background

Background• Process technologies: Acquired all patent and licensing rights for the Dubbs cracking process at Universal Oil Products Co. (U.S.) in the late
1920s. The current JGC Group technical expertise developed from knowledge and proficiency in essential refining process technologies.
• Application and deployment of nanotechnology: Nanotechnology, the foundation of catalyst development, applied to various sectors including
semiconductor and electronic materials led to successful expansion of applicable sectors.

• From petroleum refining to engineering business: Refinery construction plan put on hold in the 1930s due to the Great Depression and local
opposition. Subsequently became Japan’s first engineering company by applying process technologies acquired through licensed businesses.
• Established risk response capabilities for overseas projects: Following expansion overseas in the 1960s, established a thorough risk management system covering all aspects to ensure steady revenue from overseas projects with much greater uncertainty.

JGC Report 2023

JGC Report 2023

24

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

JGC Group's Growth Strategy

JGC Group Materiality

Materiality positioning and identification process

In line with its "Basic Policy for Sustainability," the JGC Group identifies issues that are important to stakeholders
we are involved with and issues that are important for our management as materiality. All our corporate activities areoriented toward resolving materiality, and we are also aiming to enhance the Corporate Governance Structure andSustainability Management as part of efforts toward resolving materiality.

Issues positioned as materiality are viewed as key elements, fundamental in establishing management policies and conducting
business. Through sound business activities, the JGC Group aims to help solve social issues and create economic, social, andenvironmental value.

Materiality identification process

Enhancing planetary health

Extremely highPurpose

Basic Policy for Sustainability

High

The JGC Group will endeavor centered on its "Enhancing planetary health" as its Purpose,to sustainably increase its corporate value through creation of social values.
To realize the above, it will actively pursue sustainability in the areas of environment,
society, governance, quality, safety, and health.

Materiality(Important social issues)High

Priority for stakeholders

Social issues to be addressed by the Group are
selected through analysis of GRI guidelines, ISO
26000, SDGs, and other international guidelines andglobal macrotrends. Six material issues that takeprecedence are determined from a comprehensive
evaluation of priorities from the standpoint of society,stakeholders, and the company.

Priority for the company

Extremely high

STEP 1

STEP 2

STEP 3

STEP 4

Based on SDGs and otherguidelines, select social
issues to consider

Evaluate priority forstakeholders

Evaluate priority for thecompany

Material issues are determinedfrom a comprehensive
evaluation

Materiality (Priority Issues)
Materiality

E

Societies in harmony with environment

Materiality toaddress throughbusiness
activities

G25

JGC Report 2023

Recognized Social Issues• Contributing to economic and industrial development in emerging markets• Creating employment in emerging markets• Supporting technology transfer and human resource development in emerging markets

Human rights, employee motivation• Promoting workplace diversity• Promoting female hiring and strengthening skill-building• Respecting human rights in all business activities

Energy access• Meeting greater global energy demand• Promoting wider use of renewable energy that contributes to sustainable growth• Enhancing productivity through greater global energy efficiency

Quality of life

• Responding to aging social and industrial infrastructure• Promoting development of social and industrial infrastructure in emerging markets• Improving global medical standards• Making life more convenient and comfortable

Corporate governance, risks management

Materiality Icon

• Reducing the environmental impact of fossil energy• Promoting use of a greater share of renewable energy• Protecting ecosystems, maintaining biodiversity• Promoting development or products and technologies that help curb global warming

Working with local communities
around the world

S
Materiality toachieve as aresult of businessactivities

Related SDGs

• Strengthening and improving corporate governance• Ensuring regulatory compliance in business activities• Responding appropriately to corporate and business risks

JGC Report 2023

26

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

JGC Group's Growth Strategy

Long-Term Management Vision "2040 Vision" and Medium-Term Business Plan "BSP 2025"
Long-Term Management Vision "2040 Vision"

01 Business area transformation

Target level of operating income*Five business areas to be addressed to improve planetary healthThrough materials, helping
to shape a more prosperous
future for people and the Earth

Highperformance
functional
materials

Establishing a stable energy
supply and decarbonization

Makingwidespread use ofenvironmentallyconscious
resources a reality

Energytransition

Envisioned breakdown of sales

Through medical care andhealthcare, contributing tohuman well-being
Establishingenvironmentallyconscious
industrial & urban
infrastructure

CirculareconomyOil & Gas /Renewable energy

Industrial & urban
infrastructure

Energytransition

81%

10%

60%

OthersThe 2040 Vision will occur over the three phases of "Five years of challenge," "Five years of harvest" and "10 years of rapid
growth," and we will make proactive strategic investments via these three facets of transformation to reach ¥150–200 billion ofoperating profit in 2040.

2%

Healthcare &life sciences

High-performance
functional materials

Circulareconomy

9%

10%

2020

Industrial &urban
infrastructure

Highperformance
functional
materials

10%
Healthcare &life sciences

Healthcare &life sciences

8%

10%

Target level of operating profit

2040

02 Business model transformation

03 Organizational transformation

Present

Five years of challenge

Five years of harvest

10 years of rapid growth(2020)(2021-2025)(2026-2030)(2031-2040)¥22.8

billionbillion or more

¥100.0Transformation of EPC business model

Stronger framework for regional management
Complementing existing project management from the head office inJapan, we are strengthening our regional management framework,
aimed at promptly proposing and executing solutions in an attentive,
locally produced and consumed arrangement for local clients in growthmarkets.

Diversifying into non-EPC business models

More vibrant culture of innovation

In the area of non-EPC business models, while reinforcing our existing
Functional Materials Manufacturing Business, we will undertake transformation that leverages JGC Group strengths such as licensing, PMC
and other consulting, maintenance and digital O&M, digital platformbusiness, as well as participation in new business.

In new and existing operations, a corporate culture will be fosteredfor continuous innovation in technical commercialization and businessmodel development, as needed for transformation in business areas
and models. We will seek an “ambidextrous” organization with diverse
work styles.

Five years of challenge

Five years of harvest

10 years of rapid growth(2021-2025)(2026-2030)(2031-2040)

Last fiscal year began the first five-year stage (fiscal
2021–2025) on the path to the 2040 Vision, positioned asfive years of challenge. Our medium-term business planfor this initial period is "Building a Sustainable Planetary
Infrastructure 2025 (BSP 2025)." Three key strategies
established in BSP 2025 form the basis for an array ofongoing business and investment strategies.

Three key strategies
Key Strategy 1

Transformation of EPC operations

Increase competitivenessprofitability
in mega-sized EPC projects
Transformationof andEPC
operations
Take on EPC growth markets and segments

Key Strategy 2

Expand sales of strategic products

Financial targets

JGC Report 2023

¥800 billion

Net sales
Operating profit¥60 billion

Net profit attributable toowners of the parent¥45 billion
10%

ROE

Strategic investments
A total of ¥200 billion in investment is planned during BSP 2025, including "DX," "Business development," "M&As," "Commercial
demonstrations," "Production facilities," and "R&D."
Transformation of EPC operations

Establishment of future engines of growthbillionFY2025 (Targets)Through steady progress in implementing the three key strategies,
we are targeting net sales of ¥800 billion in fiscal 2025, with operating income of ¥60 billion, net profit attributable to owners of theparent of ¥45 billion, and ROE of 10%.

Explore and develop next-generation business
Key Strategy 3¥150-¥200* Adjusted operating income: Operating income plus interest and dividend income and share of profit of entities accounted for using equity method earned in each business area

Expansion of manufacturing business forhigh-performance functional materials

Offer more product lineups in existing business for increased revenue

billion or more

The JGC Group will realize
greater income over thelong term by strategic
investment.

In the EPC business, we will be applying EPC DX in particular for thetransformation of the EPC business model. We will seek businessmodel expansion upstream and downstream in the value chain, building
on our accumulated experience, and establishing new business models
applying digital technologies.

 verview of Miedium-TermOManagement Plan "BSP 2025"

27

¥60.0

¥70.0 billion

Expansion of manufacturing business forhigh-performance functional materials¥50.0 billion

Establishment of future engines of growth¥80.0 billion

JGC Report 2023

28

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

JGC Group's Growth Strategy

2040 Vision and Materiality

Five business areas aiming to resolve materiality and social issues

The JGC Group has set forth the materiality (priority issues) to be resolved as a corporate group in line with the Basic
P.25 JGC Group Materiality). The long-term management vision "2040 Vision" forecasts our future
Policy for Sustainability (stance in the year 2040, and guided by materiality, outlines three social issues to be resolved by the JGC Group by
2040, with the aim of expanding five business areas to resolve these issues. This section describes the materiality
to be resolved by expanding into the five business areas—and illustrates the relationship between the five businessareas and materiality that the JGC Group is seeking to achieve in its 2040 Vision.

E

S
Working with local
communities
around the world

Human rights,
employeemotivation

G
Energy accessQuality of life

Corporate
governance, risks
management

Establishing a stable energy
supply and decarbonization

Reducing environmental impact ofresource consumption

Building and maintaining vital
infrastructure and services•
Under stated policy scenario, global primaryenergy demand is set to expand with demographic and economic growth from 14.4 billion
toe (ton of oil equivalent) in 2019 to 17.1 billion
toe in 2040.
• Global average temperature is expected to rise
1.5°C between 2030 and 2050, at the current
rate of warming.
• In renewable energy, the current supply of 900
million toe is expected to increase to 3.3 billion
toe by 2040.

• In waste generated, the 2016 level of 2 billion
tons is expected to reach 3.4 billion tons by2050.
• 12% of this total will be plastic waste that is notbiodegradable.

• Cities are expected to swell from 50% of thetotal population in 2018 to 66% in 2050 as
economic growth drives urbanization.
• Development of medical infrastructure will bein demand, as well as needs will increase forhigher standards of treatment and specialized
medicine in emerging countries.

Highperformance
functional
materials• Promoting development or products and technologies that help curb global warming• Improving global medical standards• Reducing the environmental impact of fossil energy• Protecting ecosystems, maintaining biodiversity

Circulareconomy• Enhancing productivity through greater global energy efficiency• Reducing the environmental impact of fossil energy

Through materials, helping to shapea more prosperous future for people
and the EarthJGC Report 2023

• Contributing to economic and industrial development in emerging markets• Creating employment in emerging markets• Supporting technology transfer and human resource development in emerging markets• Making life more convenient and comfortable

Industrial &urban
infrastructure

Five business areas to be addressed to resolve the above issues

29• Contributing to economic and industrial development in emerging markets• Creating employment in emerging markets• Supporting technology transfer and human resource development in emerging markets• Improving global medical standards

Social issues to be addressed as identified in the 2040 Vision

Resolve
Materiality

Resolved Social Issues• Meeting greater global energy demand• Promoting wider use of renewable energy that contributes to sustainable growth• Enhancing productivity through greater global energy efficiency

Healthcare& lifesciences

High-performance
functional
materials

Resolved
Materiality• Reducing the environmental impact of fossil energy• Promoting use of a greater share of renewable energy• Protecting ecosystems, maintaining biodiversity• Promoting development or products and technologies that help curb global warming

EnergytransitionJGC Group materiality

Societies inharmony withenvironment

Business Area

Establishing a stable energy
supply and decarbonization

Makingwidespread use ofenvironmentallyconscious resourcesa reality

CirculareconomyEnergytransition• Responding to aging social and industrial infrastructure• Promoting development of social and industrial infrastructure in emerging markets• Making life more convenient and comfortable

Through medical care andhealthcare, contributing tohuman well-being
Establishingenvironmentallyconscious
industrial & urban
infrastructure

Industrial &urban
infrastructure• Contributing to economic and industrial development in emerging markets• Creating employment in emerging markets• Supporting technology transfer and human resource development in emerging markets

Governance

Healthcare &life sciences
Resolve
Materiality

Sustainable
managementfoundation• Promoting workplace diversity• Promoting female hiring and strengthening skill-building• Respecting human rights in all business activities• Strengthening and improving corporate governance• Ensuring regulatory compliance in business activities

JGC Report 2023

30

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

JGC Group's Growth Strategy

Path for Fulfilling Our Strategy

Review of the first half of BSP 2025

Future policies for achieving BSP 2025

Fiscal 2023 marks the third year of the medium-term business plan "BSP 2025" that commenced in fiscal 2021. Driven
by significant changes in the environment related to the plant market over the past two years, coupled with steadyprogress with key BSP 2025 strategies, we are well on the way to achieving the financial targets of BSP 2025. We willcontinue making steady progress with the key strategies toward accomplishing these targets.

We are well on the way to achieving the goals of BSP 2025, however to ensure we definitely reach our financial targets, werecognize that it will first be essential to achieve our order target and earnings forecasts for fiscal 2023. Going forward, we
will continue to move ahead with carefully selected contracts and ensure proper management of projects already underway, while actively promoting the three key strategies of BSP 2025 with the view to accomplishing the financial targets.

Progress of financial targets
Net sales

Operating profit

Net profit (loss)

ROE(¥ billion)(¥ billion)(¥ billion)(%)

Forecast
800

800

Target800

Target
60

60

606.8

600

36.6

40

428.4

45

30.6

30

Forecast
38

Forecast
32

Target45

Forecast
7.8 7.8

10Target
10

5
15

400

0
20

Key Strategy 1

20.6"Transformation of EPC operations"

Focus on increasing project execution capacity in response to the sudden growth in the plant market and developing a system capable of increasing net sales, while advancing project execution capabilities in order to improve
competitiveness in securing orders.

Awareness of business environment0• Positive environment for the plant market to continue based on the increasing trend in global demand for LNG

-15

200

-5
-30

0

2021 2022

2023

2025 (FY)

02021 2022

2023

2025 (FY)

-45

-35.5
2021 2022

2023

2025 (FY)

-10

-8.8

2021 2022

2023

2025 (FY)

Changes in market environment
In addition to recovery in energy demand as markets look ahead to a post-pandemic future, there is an increased focus placedon transitional energy beyond the initial scenarios envisaged in BSP 2025. Furthermore, the plant market has expanded
significantly on the back of the soaring demand for LNG as a substitute for Russian gas from the standpoint of energy security,and the unprecedented pace of growth in the sustainability sector, such as hydrogen/fuel ammonia, sustainable aviation fuel(SAF) and plastic waste.

• Focus all efforts on achieving our order target and earnings forecasts for fiscal 2023, in order to achieve thefinancial targets of BSP 2025
• Focus on increasing project execution capacity in response to the increase in projects following growth in theplant market
TOPICS

New engineering company established in Chennai, India
Implemented as one approach to increasing project execution capacity. Company
established in Chennai in India, staffed with many highly skilled engineers, with plans inplace to expand up to 1,000 engineers in the future.

Background to plant market expansion
Recovery in energy demand as markets lookahead to a post-pandemic future

Future policy

Sudden increase in LNG demand froman energy security standpoint

Sustainability sector progressing
at a faster pace than expected• Use modular construction method and implement EPC DX to advance project execution capabilities
TOPICS

Sudden growth in plant market

JGC Integrated Module and EPC DX were adopted for the LNG Canada Project

Steady progress with key strategies
Over the past two years, steady progress has been made with various measures in line with the three key BSP 2025 strategiesof transforming EPC operations, expanding manufacturing business for high-performance functional materials, and establishing
future engines of growth.
Key Strategy 1

Transformation of EPC operations• Establish new engineering company inIndia• Implement EPC DX (Construction
Management System) to projects
underway• Acquisition of pharmaceutical plant
EPC business from IHI Plant Services
Corporation, etc.

31

JGC Report 2023

Key Strategy 2

Expansion of manufacturing business forhigh-performance functional materials•A ppoint Chief Manufacturing Officer (CMO)
and accelerate expansion of the manufacturing business•A cquire ceramics business from Showa
Denko Materials Co., Ltd. (now Resonac
Corporation)• Capital investment for increasing productionof high thermal conductivity silicon nitride
substrates for power semiconductors, etc.

Key Strategy 3

Establishment of future engines of growth• Establish the new "Sustainable Solutions"organization serving the overseas operatingcompany (JGC Corporation)• Secure numerous hydrogen/fuel ammoniarelated contracts for EPC projects• Establish "SAFFAIRE SKY ENERGY LLC"
for achieving the first large-scale SAF
production in Japan, etc.

• JGC’s modular construction method, J・・
I Module™, wasadopted for the LNG Canada Project, integrating pipe
rack, electrical room and instrument room, thereby achieving reduced on-site work.
• Despite the impact of COVID-19, modules were delivered
to the site on schedule, at the highest quality and praisedby numerous clients.
•
EPC DX (Construction Management System) was fully
adopted for standardization of the flow and quality of
information required for decision-making processes in the
project execution phase.

• In the overseas infrastructure sector, enhance the industrial infrastructure sector (semiconductor-related facilities,
data centers, etc.)• In the domestic sector, continue focusing on the booming life sciences sector, such as pharmaceuticals

JGC Report 2023

32

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

JGC Group's Growth Strategy

Path for Fulfilling Our Strategy

Key Strategy 2"Expansion of manufacturing business for high-performance functional materials"

Diversify sources of income for the Functional Materials Manufacturing Business by discovering new customers and expanding product applications. Make capital investments as planned for ceramics products for semiconductors to respond to growing demand in the future, to lay thefoundations for achieving fiscal 2025 plans with the view to increasing net sales and profits in the Functional Materials Manufacturing Business.

Awareness of business environment• Market conditions in our main segment of semiconductors and the semiconductor manufacturing equipment sector are expected to remain
flat through fiscal 2023, but is anticipated to recover from fiscal 2024 and beyond• The EV-related market is expected to grow at a rapid pace with a focus on China and Europe
Semiconductor Manufacturing Equipment Forecast for Japanese Equipment Billing*(¥ billion)■ Sales amount of manufacturing equipment  

Results

Forecast

Key Strategy 3"Establishment of future engines of growth"

As a sector positioned as the future engine of growth, this market is growing at an unprecedented pace, and we
recognize that we need to respond with a sense of urgency. Resources will be allocated as required in parallel withresponding to existing sectors, such as the soaring LNG, in order to continue generating positive results.

Awareness of business environment• FEED projects for the hydrogen/fuel ammonia, SAF and plastic waste recycling sectors moved forward in fiscal
2023, and this is expected to shift to EPC projects from fiscal 2024 and beyond• Government plans for the offshore wind power generation sector seem to be suffering from delays

Growth rate year-on-year
Growth Rate (%)
50
40
30
20
10
0
-10
-20
-30

5,000
4,500
4,000
3,500
3,000
2,500
2,000

Future policy

1) General• Secured FEED contracts for the hydrogen/fuel ammonia, SAF and plastic waste recycling sectors in fiscal 2023,
and lead this to securing EPC projects planned from fiscal 2024 and beyond• Aim for expected net sales exceeding ¥50 billion for future engines of growth in BSP 2025

1,500
1,000
500
0

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025
(Forecast) (FY)* "Japanese Equipment Billing" refers to domestic and overseas billing of Japanese manufacturers (including overseas plants).
Source: Semiconductor Equipment Association of Japan, "Market Forecast Report Semiconductor and FPD Manufacturing Equipment (Fiscal years 2023-2025)"

Future policy[Catalysts and Fine Chemicals Sector]• Production facilities will be increased to meet the anticipated increase in demand for catalyst elements and various polishing materials.
Production of existing products will also be increased.
• Petroleum refining and chemical catalysts that have a high market share in Japan will be marketed overseas. Efforts will also be made foruncovering new sectors for fine chemicals.
• Plan a total of ¥20 billion in capital investments, including land already purchased for businesses, from fiscal 2025 to fiscal 2030 to respond to
growing demand for catalysts for carbon-neutral fuel (synthetic fuel), and catalysts and adsorbents for chemical recycling, as well as new finechemical products such as materials for high-speed communications and functional abrasive particles for semiconductors.

[Fine Ceramics Sector]• Move ahead with capital investment plans for high thermal conductivity silicon nitride substrates for EV power semiconductors expected to
grow in demand. Verify investments by fiscal 2025, with the aim of setting up production•C oordinate efforts with JFC Materials Co., Ltd. and the Sendai Plant to improve operational efficiency and profits in the engineering ceramics sector
TOPICS

Capital investment for increasing production of ceramics for semiconductors – increase profits
of existing businesses and expand sales of strategic products<High thermal conductivity silicon nitride substrates for EV power semiconductors>• Make capital investments for increasing production. Operations planned to begin
from fiscal 2023
• Purchase new land to respond to growing markets (total investment of ¥10 billion)<Ceramics for semiconductor manufacturing equipment>• Make capital investments for high-precision manufacturing.
Operations planned to begin from fiscal 2023
• Begin capital investment plans for increasing production capacity

33

JGC Report 2023

Tomiya Factory, which produces high thermal conductivity silicon
nitride substrates and semiconductor production components

TOPICS

Awarded contracts for SAF and hydrogen plant in Japan and oversea
Awarded contract for the first large-scale domestic SAF production
demonstration facility in Japan• Secure contract for large-scale domestic SAF production demonstration facility on the site of the Cosmo Oil Co., Ltd. Sakai Refinery• Construction to be completed and operations expected to begin withinfiscal 2024, with plans to begin supplying 30,000 kL of SAF annually in
2025 when World Expo 2025 will be held in Osaka, Kansai• More complex and larger plants are expected in the future to achieve
the 2030 target of 1.71 million kL set by the government. This willleverage our extensive track record with design and construction oflarge-scale petroleum refining, petrochemical and chemical plants inJapan and overseas• In addition to construction of SAF production plants, efforts are being
made to develop a domestic SAF supply chain as a business operator
Awarded contract for hydrogen production plant in Australia• Joint project between Sumitomo Corporation and Rio Tinto Ltd. infiscal 2023. Construct a hydrogen production plant capable of 250
tons annually on the site of the alumina refinery plant owned and operated by Rio Tinto Ltd.

Site for the Construction of Domestic SAF
Manufacturing Equipment(Sakai Refinery, Cosmo Oil Co., Ltd.)

Planned construction site of alumina refinery plant©Rio Tinto 2023

Demonstrate the development of green ammonia production technology derived from renewable energy•Development and demonstration of "Integrated Control System"
achieved by optimizing operation of green chemical (ammonia) production plant•Plant location agreement signing ceremony held in Fukushima
Prefecture. Operations planned to begin from fiscal 2024

JGC Report 2023

34

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

JGC Group's Growth Strategy

Path for Fulfilling Our Strategy

Growth Strategy Investments
Key Strategy 3

A total of ¥200 billion in growth strategy investment is planned with the aim of accelerating the three key strategies during the five yearsof BSP 2025. Up to ¥32 billion was invested over the two years to fiscal 2022, primarily in EPC DX-related investment, product development investment and capital investments in the high-performance functional materials business. Investments have already been approved
internally, with around ¥100 billion planned including projects invested from fiscal 2023 and beyond. Suitable investment opportunities willcontinue being identified to make investments in order to achieve growth strategies through to 2040.

"Establishment of future engines of growth"

Future policy¥100 billion

2) Secure required resources• Secure the resources required as a steady and consistent engine of growth for the future
TOPICS¥32 billion¥68 billion

Invested

Approved internal investments

License agreement with Toyo Engineering Corporation for SAF production plants¥200 billion• Concluded alliance agreement for FEED and EPC contracts for domestic SAF production plants in fiscal 2023
•In response to increasing demand for SAF in the future, and theincrease in projects of diverse materials such as bioethanol• In addition to the extensive track record of construction of large-scale
petroleum refining, petrochemical and chemical plants owned by bothcompanies in Japan and overseas, our range of know-how as a SAF
operator will be integrated with Toyo Engineering Corporation's knowhow and technical expertise related to synthetic gas-derived SAF production using materials, such as ethanol and woody biomass, to cover
all aspects from the conceptual stage through to EPC projects

Investment Plan
Fiscal 2022 Results

Transformation of EPC operations
Expansion of manufacturingbusiness for high-performance
functional materials• Capital investment related to high thermal conductivity silicon nitride substrates• Investment to increase production facilities• Capital investment into new products/technologies• Acquire ceramics business from Showa Denko Materials Co., Ltd. (now Resonac Corporation), etc.

• Government plans for the offshore wind power generation sector seem to be suffering from delays, so approachfrom a long-term perspective• Expand into food technology-related sectors such as biomanufacturing, land-based aquaculture and cultured
meat as new engines of growth• Biomanufacturing• SAF business, etc.

• DDR commercialization• INTEGNANCE® VR

Alliance agreement signing ceremony

3) Revise key areas and sow seeds for business over the long-term perspective

Plan for Fiscal 2023 and Beyond• EPC DX, execution technology-related technology• Establishment, operation, etc., of Operation Center in India

Establishment of futureengines of growth• Ammonia-related• Food technology-related (land-based aquaculture, cultured-meat)• Healthcare-related investments, etc.

Cash will continue being used effectively, including M&A, for ongoing growth strategic investments

TOPICS

Strategic investment framework

Promotion of the "Integrated Biofoundry®" business• In addition to the medical and healthcare
sectors, biomanufacturing is expected
to expand into the materials, energy,
food and other sectors in the future,with the market scale anticipated to bearound ¥200 trillion by 2030
• Utilize scale-up technology honed withprocess development in the energy
sector, and technology on the optimal
design of fermenters developed in thepharmaceuticals production sector

Biofoundry functions

Production processdevelopment function

DesignThe Group Investment and Loan Committee established under the holding company JGC Holdings Corporation conducts
quantitative analyses that factor in capital costs when making investment decisions, and also carefully and cautiously deliberates R&D projects based on their potential to lead to future business expansion. It also monitors progress after investments are
made, as part of a system that can properly study whether to withdraw from certain businesses.

Collect data,
knowledge

Learn Breeding

JGC Holdings
Build

stock

Board of Directors
Deliberation, reporting
Chairman and CEO

Image of Integrated Biofoundry

4) Diversify into non-EPC business models• Join various sectors as a business operator, such as SAF, hydrogen/ammonia, plastic waste recycling, cultured
meat, and land-based aquaculture

JGC Report 2023

President and COO

Deliberation, reporting
Group Investment and Loan Committee• Construct pilot plant of small modular reactors (SMRs) in Idaho, U.S. using NuScale Power, LLC modules with
operations planned to begin from 2029. Dispatch JGC Group engineers and acquire know-how from the construction project of small modular reactors

35

Selects, oversees

Test

Chairman: Chairman and CEO
Members: P residents of main operating companies
Executive Office: Strategic Planning Unit, Strategy Planning Office

Selection, supervision

Deliberation, reportingJGC Holdings and operating company investment departments

JGC Report 2023

36

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Reinforcing
Management
Resources forContinuous Growth
Continuous gains in corporate value depend not only on
steady results from management strategies but also on
reinforcing management resources that support sustainable growth. Here, we describe JGC Group roles for society
and the environment, including climate change and humanrights initiatives. This chapter also introduces human andintellectual capital initiatives, our corporate governancesystem, stakeholder engagement, and others.

37

Sustainability Management

39

Climate Change Initiatives

41

Human Capital Initiatives

45

IP / Intangible Asset Initiatives

59

Respect for Human Rights in Supply Chains61

Occupational Health and Safety

63

Quality Management System

64

Corporate Governance

65

Risk Management

75

Compliance

77

Stakeholder Engagement

79

JGC Report 2023

JGC Report 2023

38

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Reinforcing Management Resources for Continuous Growth

Sustainability Management

Basic stance

Sustainability promotion system

Sustainability initiatives consistent with the JGC Group’s "Basic Policy for Sustainability" are pursued which also
support continuous growth of corporate value.

The Sustainability Committee formulates policies and action plans relevant to sustainability and manages and reports on
progress in activities in which the Group operating companies collaborate. With increasing demand related to sustainability inrecent years, from fiscal 2023 the committee changed the number of meetings held from once a year to three times and now
comprises the COO and CFO as members, to ensure more sustainability-related business activities and even greater disclosureof information.
The results of the Sustainability Committee's activities conducted throughout the year are also reported to the Board of
Directors once a year.

Basic Policy for Sustainability

JGC Holdings

The JGC Group will endeavor centered on its "Enhancing planetary health" as its Purpose, to sustainably
increase its corporate value through creation of social values.
To realize the above, it will actively pursue sustainability in the areas of environment, society, governance,
quality, safety, and health.

Board of Directors
Deliberation, reporting

Selects, oversees

Representative Director, Chairman,
and Chief Executive Officer (CEO)

Representative Director, President,
and Chief Operating Officer (COO)

Deliberation, reporting

The JGC Group released its "Approach and Initiatives for Sustainability" in the securities report for the fiscal 2022. The report
positions the following sustainability items as key factors to consider based on the Basic Policy for Sustainability, and includes
details outlining each initiative.
Key Sustainability Item

Details of Main Initiatives

Sustainability Committee
Chairperson: Representative Director,
Chairman, and Chief Executive
Officer (CEO)Committee Members: Representative Director, President, and Chief
Operating Officer (COO)	Director, Senior Executive Vice President, andChief Financial Officer (CFO)
Presidents of main operating companies
	General Manager of Sustainability Co-Creation Unit
General Manager of Strategic Planning Unit
Administrative Office: Strategic Planning Unit

Relevant Page

Addressing climate change

Take climate action through business activities/Promote disclosure inaccordance with TCFD, etc.

P.41 Climate Change Initiatives

Human capital initiatives

Create a human resources portfolio, and increase employee engagement
and promote inclusion and diversity toward achieving the portfolio, etc.

P.45 Human Capital Initiatives

Human rights compliance

Develop a human rights due diligence process, etc.

P.61 R espect for Human Rights in
Supply Chains

Quality management initiatives

Promote a quality management system at each group company, etc.

P.64 Quality Management System

Occupational health and safety

Promote an occupational health and safety management system at
each group company, etc.

P.63 Occupational Health and Society

Information security initiatives

Develop an information security system promotion structure, etc.

P.75 Risk Management

Compliance initiatives

Promote a group compliance system/Establish and implement aninternal whistleblowing system, etc.

P.77 Compliance

Subcommittee

CDP response

CO2 emission reduction
planning

Human rights anddevelopment

Deliberation, reporting

Expanded disclosure on sustainability issues
The JGC Group emphasizes dialogue not only with investors, shareholders, clients, and employees but also local communities andother stakeholders. Broad access to information on our sustainability efforts is provided through expanded disclosure on the sustainability section of our corporate website. By recognizing stakeholder expectations and concerns for the Group, we can incorporate
measures to address these issues in our business activities and pursue activities supporting sustainability, and we will be considering
further steps to improve information disclosure in the future.

Inclusion and diversity

Selects, overseesGroup Companies

Details of main Sustainability Committee activities
FY2021

FY2022

1st meeting:	Three subcommittees formed: CDP response system development, CO2 emission reduction planning, and human rights anddevelopment
2nd meeting:	Basic policy for human rights and development approved, Inclusion & Diversity Subcommittee formed
3rd meeting:	CO2 emission reduction plan and CDP response reported
4th meeting:	Details on Basic Policy for Inclusion & Diversity
5th meeting:	Deliberation related to forming Basic Policy for Inclusion & Diversity→ Adopted as company regulations after being approved by the Board of Directors
P.53 Human Capital Initiatives: Promotion of inclusion and diversity

FY2023

6th meeting:	CDP response reported, details about formulating action plan proposals for reducing total CO2 emissions

In addition to the topics shown above, the Sustainability Committee discusses the latest trends related to sustainability,
JGC Group's response and other information reported each time by the Strategic Planning Unit that operates as the Executive
Office, in order to respond as quickly as possible to the needs of society.

Sustainability section of the corporate website

Message from the Sustainability Committee Administrative Office
Further details on sustainability initiatives are available
on the JGC Group website.
https://www.jgc.com/en/esg-hsse/

Aiko Horikawa
Sustainability Management Group Manager
Planning Office
Strategic Planning Unit, Strategy
JGC Holdings

39

JGC Report 2023

I have been part of the Sustainability Committee since it was established in December 2021, and am
in charge of operations as the administrative office. There are currently four subcommittees in action,
starting from our response to climate change and now has been expanded to cover topics, such as our
response to human rights and inclusion and diversity. There are vibrant discussions in the committee
by being shared activities report of each subcommittee and topics related to the latest in sustainability.
I think some of our key accomplishments during fiscal 2022 include efforts toward creating a system foraddressing CO2 emissions and reduction plans as a group, as well as formulating the Basic Policy for
Human Rights & Development and the Basic Policy for Inclusion & Diversity as the Group's basic policies.
Going forward, the way corporations approach sustainability will need to include initiatives covering an even broader scope, with even more detailed and accurate disclosures. We will continue
responding to higher priority items while monitoring global trends, with the view to helping to achievesustainability for the JGC Group and society as a whole.
JGC Report 2023

40

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Reinforcing Management Resources for Continuous Growth

Climate Change Initiatives

Basic stance

Recognition of climate-related risks and opportunities

As we work toward a sustainable society, addressing climate change has become a global challenge. The JGC Grouphas identified "societies in harmony with environment" as a materiality. Besides taking climate action through environmentally conscious business activities, the JGC Group studies and formulates business strategies accounting for
scenario analysis in recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

Main risks

CDP Logo guidelines for partners

New regulatory risks

Introduction of global carbon pricing may lead to higher equipment and fuel costs, which may affect business costs inthe future.
We also recognize that introduction of carbon taxes and stricter emission targets in various countries poses a risk of fewer
contract opportunities, from a decline in oil & gas projects.

Technology risks

Lower gasoline demand from the spread of electric and fuel cell vehicles poses a risk of fewer contract opportunities forplants in the oil & gas industry. A similar risk is posed by the spread of decarbonized materials and a shift to renewableenergy driven by the spread of high-performance storage batteries.

Regulatory risks

Firms bidding on plant construction projects are likely to face stricter information disclosure requirements regarding theirclimate change measures. This poses a risk of lost opportunities or unsuccessful bids, which may affect the corporate
reputation.

Market risks

Lower plant demand in the oil & gas industry may result in fewer contract opportunities.
An aversion in financial and capital markets to business related to fossil fuels also poses a risk that projects may not beapproved.

Reputation risks

Failure to maintain or build on our reputation as an enterprise with the technical expertise to contribute to climate changesolutions such as carbon reduction, renewable energy, and hydrogen applications may adversely affect the JGC Group in
various ways, such as contract opportunities, financing, or securing human resources.

Acute physical risks

More frequent extreme weather events such as heavy rain, storms, typhoons, and flooding attributed to climate change may
physically damage materials, equipment, and JGC Group facilities, adversely affect employees, and delay procurement.

Chronic physical risks

Higher average temperatures may make longer construction periods more common, due to lower labor productivity atconstruction sites in temperate and tropical regions.
Another concern is increased costs for countermeasures and accident compensation, due to higher occupational safety
risks. There is also a risk of higher shipping costs from a lack of ports if sea levels rise in coastal areas.

CDP logo
The CDP logo is available :The logo must never be recreated. The full color version must only be applied to white backgrounds. A white only version
is supplied for use on coloured backgrounds. The primary logo features our
strapline ‘Disclosure Insight Action’

When CDP works in partnership with an organization for the duration of the partnership or a particular project;
to indicate that a company publicly takes part in the CDP process as a signatory or reporting organization; andwhen an organization buys a service from us (eg reporter services, supply chain or investor membership).

Please use this version wherever possible.

Climate change related disclosure
In participating in international frameworks for climate change disclosure, the JGC Grouphas responded to CDP surveys since 2021 (when the Group received a B rating in fiscal
2022) and has followed TCFD disclosure guidelines as a supporter, including securities
reports.

To ensure the CDP logo maintains impact, especially in busy graphic environments, a deﬁned clear space must be
maintained around it. To achieve this please leave a minimum space around the logo that is equivalent to the smallest
triangle. See diagram below .

Always ensure the logo is prominently positioned. In situations where it is necessary to feature it at a smaller size, please
do not apply it at a width less than 25mm as indicated.

DISCLOSURE INSIGHT ACTION

25mm

DISCLOSURE INSIGHT ACTION

Governance

The JGC Group responds to climate change issues under the leadership of the representative director and CEO, who is
responsible for ensuring that environmental issues are addressed in Group business strategies and targets. One facet of
this is assessing and managing climate-related risks and opportunities. Accordingly, the long-term management vision andmedium-term business plan announced in May 2021 were established through Board discussions based in part on results ofclimate change scenario analysis and an assessment of these risks and opportunities. Monitoring of climate change issues isconducted by the Sustainability Committee, which formulates policies and action plans related to sustainability, including theGroup response to climate change, and deliberates to evaluate and promote relevant action.

15mm

Main opportunities
The JGC Group has an extensive record in renewable energy plants such as solar and biomass power plants, which,as the international community shifts toward decarbonization, may increase contract opportunities. The JGC Group has
also taken steps to expand orders by establishing an organization dedicated to the promising segment of offshore wind
power generation.

Products and services

Strategy

The JGC Group is engaged in technological development and other initiatives in hydrogen, ammonia, and SMRs applications aimed at a decarbonized society. More contract opportunities here can be expected in the future.

The JGC Group recognizes risks and opportunities related to climate change, which are reflected in strategies.

Greater worldwide demand for a circular economy can be expected to drive demand for technologies under development
by JGC Group, which include chemical recycling of plastic waste, recycling of fiber waste, and SAF.

Net-zero emissions

Changes in market environment
due to energy transition

Low carbon / decarbonization in Oil & Gas
CO2 capture• Improving energy efficiency of current infrastructure with digitaltechnology• Progress in recovery of CO2 from energy plants

CO2 emissions
reduction

Expansion of clean energy

Oil & Gas

• Expanding use of renewable energy• Progress in deploying grid-stabilizing technologies, such as storage
batteries and EMS• Progress in introducing hydrogen/fuel ammonia as a renewableenergy carrier• Increasing uptake of EVs• Establishing market mechanisms for carbon trading

Clean energy
2020

2030

2040

Decreasing

41

Definition
2040

Analysis reference data

Based on data from the International
Energy Agency (IEA)'s World Energy
Outlook 2020

Scenarios

Based on the following outlook
scenarios• Stated Policies Scenario (STEPS)• Sustainable Development Scenario(SDS)

JGC Report 2023

Based on analysis of the above scenarios and the risks and opportunities, Energy Transition, Circular Economy and HighPerformance Functional Materials are positioned as business areas for building the JGC Group’s purpose. Additionally, theintroduction of policies in the SDS on matters such as expanded renewable energy use and carbon pricing that supports
reduced greenhouse gas (GHG) emissions are viewed by the JGC Group as an opportunity to expand into related businessareas by leveraging Group core competencies.
Key Areas

Increasing

Analysis of energy transition, circular
economy, and high-performance
functional materials areas that arehighly relevant to climate change

Business Area

Segment

STEPS

Stated Policies
Scenario (STEPS)

Low-carbon /decarbonized oil &gas• Blue hydrogen/fuel ammonia• CCS• Energy conservation technology• Carbon credit

Refinery

Clean energy• Green hydrogen/fuel ammonia• Small modular reactors (SMRs)• Offshore wind power generation• Process engineering• Renewable energy and nuclear power
knowledge• Design and installation know-how ofoffshore structures

Energytransition

Circular economy• Sustainable aviation fuel (SAF)• Chemical recycling (plastic and fiber waste)• Process engineering• Network with customers and partners

High-performance functional
materials• Carbon and chemical recycling catalysts• Energy storage and new energy materials• High thermal conductivity silicon nitride substrates
for EV power semiconductors• Catalyst development and businessfoundation• Nanoparticle preparation and control
technology• Fine ceramics development andmanufacturing

SDS

Sustainable
Development
Scenario (SDS)

Energytransition

LNG
Power generation, nuclear
power, new energy
Hydrogen/fuel ammonia—

Circular economy

Plastic waste chemical
recycling—

High-performance
functional
materials

Catalysts
Fine ceramics

Other

Consulting

JGC Group Strengths• Large-scale oil and gas project knowledge
and track record• CCS facility design and construction trackrecord• Maintenance track record

Business Growth Potential (Scale of 1-6)

TargetTarget ofanalysis

Business areas contributing to achieving societies in harmony with environment (2040 Vision)

2050

Scenario Analysis
Scenario Item

Oil & gas sector applications of CCS, for which the JGC Group has completed multiple projects in Japan and overseas,
and CCUS, for which joint development is underway, are expected to expand contract opportunities.

Initiatives related to business areas indicated with icons are shown on the next page.

JGC Report 2023

42

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Reinforcing Management Resources for Continuous Growth

Climate Change Initiatives

Metrics and Targets

Key initiatives and results to dateHydrogen/Fuel Ammonia Sector

Energy Transition Segment

In addition to providing support for customers planning to shift from fossil fuels, as an EPC contractor we are facilitating the
deployment of hydrogen/fuel ammonia through technical development together with our partners.
<Key initiatives>• Launched a green chemical production plant demonstration project for green ammonia etc. with Asahi Kasei
Corporation in Fukushima Prefecture (selected as NEDO project)• Concluded an alliance agreement with Toyo Engineering Corporation for EPC projects for fuel ammonia plants• Secured contract for construction work of a ground facility for blue hydrogen and ammonia production pilot
project facility in Niigata Prefecture• Facilitated research and development for ammonia isolation and hydrogen production technology with KUBOTA
Corporation and TAIYO NIPPON SANSO CORPORATION (selected as NEDO project)• Awarded contract for hydrogen production plants in Australia, etc.

Commitment to Carbon Neutrality by 2050
While the core domain of the JGC Group has long been Oil & Gas, we announced our "Commitment to Carbon Neutrality by
2050" in 2020 as a sign of our dedication to enhancing corporate value in a sustainable manner through transformation towardachieving planetary health.

TargetNet-zero Initiatives

Scope 1+2

For Scope 1+2 reductions, adopt low-carbon / decarbonizedpractices, such as energy conservation in our businessactivities, or using renewable energy

2050: Net-zero CO2 emissions
2030: 30% reduction in CO2 emissions
intensity per base unit of net sales
Ammonia synthesis pilot project
facility (Fukushima)

Scope 3

Leverage technologies cultivated by the JGC Group toprovide energy transition solutions to stakeholders

Reduction as determined in consultation
with stakeholders

Sustainable Aviation Fuel (SAF) SectorCircular Economy Segment

From our expertise as both a business operator and an EPC contractor, we are contributing to decarbonization of the airline
industry through our SAF deployment projects.
<Key initiatives>• Established merger company SAFFAIRE SKY ENERGY LLC with Cosmo Oil Co. Ltd. and REVO International
Inc. for development and demonstration of SAF production technology based on used cooking oil, and development of supply chains• Concluded an alliance agreement with Toyo Engineering Corporation for domestic SAF production plants

Chemical Recycling SectorCircular Economy Segment

As a business operator, we are pushing forward with plastic and fiber waste recycling with our partners with the view to build
a recycling-oriented society.
<Key initiatives>• Partnered with Iwatani Corporation and Toyota Tsusho Corporation for a hydrogen production model using awaste plastic gasification facility• Established RePEAT Co., Ltd. with Teijin Limited and ITOCHU Corporation for the chemical recycling of polyester
products

High-Performance Functional Materials Sector

High-Performance Functional
Materials Segment

Risk Management
The JGC Group strives to mitigate and prevent various specific expected risks including climate change by coordinating efforts
with the Sustainability Committee, in line with the framework of the Risk Management Committee and other bodies.

JGC Report 2023

Scope 1+2 (t-CO2)

FY2020(Base Year)FY2021

FY2022

132,546

133,537

134,004

Scope 1

84,32587,85682,943

Scope 2

48,22145,71751,061

Consolidated net sales(¥ billion)

433.9

428.4

606.8

Emissions intensity perbase unit of net sales(t-CO2/¥0.1 billion)

30.55

31.18

22.08

Comparison with base year
Scope 3 (t-CO2)

–

2%

-28%

Not disclosed

702,873975,775

https://www.jgc.com/en/esg-hsse/environment/
climate-change/pdf/climate_change2023_e.pdf

The JGC Group is coordinating efforts between relevant departments under the framework of sustainability promotion to study
ways to reduce our CO2 emissions including the use of carbon credits, etc., and enhancing information disclosure.

<Key initiatives>• Japan Fine Ceramics Co., Ltd. led capital investments for increasing production, etc. for high thermal conductivity silicon nitride substrates for EV power
semiconductors• JGC Catalysts and Chemicals Ltd. led capital investments, etc. to meet the growing demand for catalysts for carbon-neutral fuel, and catalysts andadsorbents, etc. for chemical recycling43* Six main group companies: JGC Holdings Corporation, JGC
Corporation, JGC Japan Corporation, JGC Catalysts and Chemicals
Ltd., Japan Fine Ceramics Co., Ltd., and Japan NUS Co., Ltd.
(Note) R efer to our CDP Climate Change Questionnaire 2023 for the
breakdown in Scope 1+2 and Scope 3 and reasons for reductions.

CO2 Equivalent
Emissions Data

Key initiatives for reducing CO2 emissions

We are increasing production capacity to meet the growing needs of customers toward achieving carbonneutrality.

P.75 Risk Management

From fiscal 2020, we have been calculating anddisclosing Scope 1+2 and Scope 3 for our six
main group companies*. While net sales for fiscal
2022 increased significantly over the base year, theamount of Scope 1+2 emissions was kept at onlya slight increase, resulting in a 28% reduction inemissions intensity per base unit of net sales (compared to fiscal 2020).

Promotion of studies for reducing CO2 emissions toward achieving carbon neutrality by 2050
In fiscal 2022, we studied measures for reducing the JGC Group's CO2 emissions with the view to achieving net-zero
CO2 emissions by 2050. During fiscal 2023, we are planning to first identify specific action plans aimed at reducing
Scope 1+2 emissions, formulate a roadmap toward implementation, and gradually put them into action.

Active participation in climate change-related initiatives
In addition to compliant disclosures as a company endorsing TCFD, the JGC Groupjoined the TCFD consortium from January 2023 and has been taking part in various
events, such as roundtable discussions with investors. We are working on enhancing our
response to climate change and disclosure of information by facilitating the exchange of
information with other companies and investors.
Since May 2023, the JGC Group has also been participating in the "GX League" led by
the Ministry of Economy, Trade and Industry. The Company plays an active role in discussions as part of working groups within the GX League on the state of the carbon credit
market and frameworks to suitable assess contributions made by Japanese companies
to address climate change.

JGC Report 2023

44

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Reinforcing Management Resources for Continuous Growth

Human Capital Initiatives

Personnel strategy basic stance

Message from the CHRO

Human resources are the JGC Group's greatest asset throughout all businesses, such as the Total Engineering
Business and Functional Materials Manufacturing Business, and are the most important foundation for management.
We are pressing ahead with completing a new human resource strategy by 2030, with the aim of developing thediverse human resources portfolio deemed essential for executing the business strategies of expanding businessareas and diversifying business models set forth in 2040 Vision.

Promoting human resource strategy
tied with management strategy
Takuya Hanada
Chief Human Resource Officer (CHRO)JGC Holdings

Achieving our purpose of "Enhancing planetary health"utilizing digital technology, hiring of the four human resources
portfolios in a strategic manner, and training for advancing
and diversifying their skills.
Maintaining a high level of motivation is vital for ensuring
our Group's human resources are able to apply themselvesto the best of their abilities, and we are making an active effort
to implement measures so employees gain a sense that a"fulfilling work leads directly to a fulfilling life, and makes theirown lifestyles more affluent."
In fiscal 2022, we embarked on a new personnel system
built on the policy of "Pay for VALUE", which shifts away fromthe seniority-based aspects of the past and instead focuseson the roles and accomplishments as well as the value ofwork and responsibilities. From fiscal 2023, we made significant improvements to compensation that applies to theholding company and two operating companies in Japan.
We are also concentrating efforts toward measures aimed
at increasing engagement with employees so they can apply
company management policies to their own work duties, andenhancing inclusion and diversity such that diverse humanresources can actively apply themselves. A broad range ofmeasures are also being put in place to create a more comfortable and rewarding workplace environment.
Going forward, we will continue to play an active role
implementing human resource strategy that is tied with man(HRGD2030)
agement strategy.

The JGC Group formulated the long-term management
vision "2040 Vision" in fiscal 2021, defining our purpose as"Enhancing planetary health" by expanding the five businessareas and diversifying business models in order to achievesustainable growth. As an engineering company, humancapital, that is, human resources, is our most vital asset—
engineering companies can even be viewed as companies
that cultivate the personnel who actually construct plants. We
created "Human Resources Grand Design 2030" as the new
overall human resource strategy with the view to achieving
the 2040 Vision.
In addition to the ongoing training of human resources
for project execution underpinning EPC operations in theoil and gas sector, the new human resource strategy aims
to develop a new portfolio comprising four types of humanresources deemed essential for achieving the 2040 Vision:
human resources for specialist roles (experts), business andmanagement, and innovative roles. The objective is to become
an organization where human resources are able to continue
bringing about their own transformation, as well as the organization able to continue bringing about its own transformation.
The plan for the new human resource strategy is to firstvisualize the quantitative deficiencies between the current
human resources portfolio and that required for the future,and develop a talent management system with the aim ofharnessing human resources in an efficient manner by

2040 Vision
Business
Strategies

2026

For JGC Group

Development of
recruitment options
Strategy to secure skilledhuman resources

Hiring ofdiverse andhighly-skilledhumanresources

Alumni recruitment
Referral recruitment

Talent/Skill-based
management

Existing
main humanresources

Secure diverse professional humanresources and ensure competitiveedge as fast as possible

Human resources forbusiness and management

Human resources for
specialist roles (experts)

Human resources forinnovative roles＋
Human resources for project execution

 uman resource strategy executionHsystemO

Workplacewith relationshipof trust

D

In 2022, we appointed a Chief Human Resource Officer(CHRO) to head the HRO Council as the implementing bodyunder the HRM Committee (deliberative body for humanresources matters), with the aim of properly establishinghuman resource strategy tied with management strategy.
This system ensures the CHRO coordinates efforts with the
JGC Holdings Corporation CEO and COO for proposing
human resource strategy tied with management strategy,
and in line with these, HROs of each company move ahead
with their own human resource strategy tied with their company's business strategies, which are then discussed by the
HRO Council.

2030

Development

E
Encourage
understanding ofshared objectives

Personal
responsibility of
purposeReskilling platform

L

Engagement

Life & Work

Positive cycle with comprehensive
mental and physical support
Sharing ofvisionRewardingwork
Sense ofgrowth2028

Comprehensive
mental andphysical support

2026

Enhanced compensation
Enhanced benefits foroverseas positions

2024

I&D company-widetraining
Purpose journey training• Strengthening EPC business model• Diversifying to non-EPC business models

Human resources development and improving engagement
so employees make the most of their own capabilities

On boarding

Multi-skilledhumanresources

New training program

Diversifying business model• Energy transition• Healthcare & life sciences• High-performance functional materials• Circular economy• Industrial & urban infrastructure＋

Professional group able
to carve out a future withintegrated capabilities

M
Management
SystemPeople/organization able
to continue bringing about
own transformation

On boarding program

Expanding to five business areas

2030

2028

Visualizationof human
resources

Centralization of humanresources information

Transformation in Business Models

Human resources portfolio for achieving 2040 Vision
Newly requiredhuman
resources

Human Resources Grand Design 2030
2024

Transformation in Business Areas

Manager upgrade
programCompany-employee
information sharing
measures

CDM allocation/CDP
career consultationJGC Holdings
CEO & COO
JGC Holdings
HRM Committee (deliberation)
HRO Council (implementation)

JGC Holdings CHRO
(Chief Human Resource Officer)

Operating Companies
HRO

HRO

HRO

HRO

・
・
・

For JGC Members

45

JGC HRGD2023
Report 2023

Enhancing planetary health

3

JGC Report 2023

46

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Reinforcing Management Resources for Continuous Growth

Human Capital Initiatives

Overall human resource strategy

Human resources recruiting and training

Our human resource strategy aims to develop the human resources portfolio required for achieving the 2040 Vision based on
three core elements—monitoring and reviewing human resources portfolio; strategically recruiting and training those humanresources; and engagement.

Monitoring and reviews ofhuman resources portfolio
Visualization and clarification ofrequired human resources

Creation of optimal humanresources allocation system(talent management)

Human resources recruiting
and training
Recruiting• New graduate recruitment• Mid-career recruitment• Alumni recruitment

Training for humanresources succession

Training for advancing
and diversifying skills• OJT• Off-JT

Enhancing humanresources engagement
Making purpose personally
relevant
Promoting inclusion & diversity

Developing rewarding systems
Promoting retention
Creating a comfortableworkplace environment

1. Visualization and clarification of required human resources
Developing the human resources portfolio required in the future involves visualizing and clarifying the quantitative deficiencies
in the current human resources portfolio—mainly comprised of human resources for project execution—and the three humanresources portfolios required in the future, and strategically hiring and training human resources in an efficient manner to coverareas that are lacking in each portfolio.

Human resources for business and management,
specialist roles, and innovative roles

Human resources for
project execution

Human resources for
specialist roles (experts)

A tactical approach is taken for diverse recruiting that includes new graduate recruitment, mid-career recruitment and alumni
recruitment, to secure the human resources deemed essential for achieving the 2040 Vision.

New graduate recruitment
In addition to traditional methods of recruitment, a new recruiting segment for "TR (transformation)" has been formed as aproactive way of securing human resources with diverse areas of expertise (biotechnology, medical engineering, nuclear energy,etc.) or capable of creating new businesses. A DX segment has also been created to secure human resources capable of bringing about digital transformation, with the view to assigning capable personnel to departments related to DX and IT.
Students amongst the pool of new graduates are better educated about their careers earlier on every year, and the number ofstudents brought on board for internships during school holidays are also increasing. We are fine-tuning ideas like creating new
courses accepting students involved in the DX and TR outlined above, as we actively hire new graduates as human resources
who will be taking the reins of the JGC Group in the future.

In addition to greater recruitment of human resources aimed at increasing project execution capacity, we proactively engage
in mid-career recruitment of human resources who are experts in new business areas that underpinned by as-of-yet unknown
technical competence and knowledge or the DX and IT sector that is expected to be more important in the future.
We have raised the target number of mid-career recruits by 30% or more over the previous fiscal year at the three companies
of JGC Holdings Corporation, JGC Corporation and JGC Japan Corporation's Total Engineering Business. We are increasingthese numbers by adopting new methods of recruitment, such as referrals (human resources introduced by existing employees)
and direct recruiting, and these efforts have produced positive results.

Alumni recruitment (leveraging networks)

Human resources portfolio by 2030
Human resources forbusiness and management

1. Recruiting

Mid-career recruitment

Monitoring and reviews of human resources portfolio

Current human resources portfolio

The JGC Group considers recruiting and training of human resources extremely important, not only for transforming existing
operations, but also for expanding business into new areas. In hiring and training human resources, efforts are being made tosecure advanced and diverse human resources in line with the four core strategies: strategic recruiting; training for advancing
and diversifying skills; training for human resources succession; and promoting retention.

Human resources forinnovative roles

Human resources for project execution

2. Creation of optimal human resources allocation system (talent management)
We are considering the introduction of a system that allows monitoring and reviewing of deficiencies relative to the envisioned
portfolio, by harnessing the leading digital technology used throughout HR to visualize and clarify human resources, and creating a framework that facilitates optimal personnel allocation planning for diverse business areas and business models.

We actively rehire those who at one point left or retired from our group company. In fiscal 2022
these efforts were honored by the third consecutive Encouragement Award from the Japan Alumni
Award, which promotes renewed ties between organizations and their former employees and recognizes outstanding efforts to this end. In fiscal 2023, we received the Excellence Award in the
Design of Will Category.
The Alumni Community is run by volunteers, and there are currently more than 150 alumni registered. Alumni also held Echo-Day for the past five years in a row on October 25, the anniversaryof the company's founding.
We also opened a human resources registration system named "JGC members," catering topeople outside the JGC Group who are seeking information about the company. This initiative
regularly disseminates information and organizes activities for people outside the company who share the same attitude toward
the JGC Group's purpose.

Alumni recruitments in last four years
Fiscal 2022

8

Fiscal 2021

0

Fiscal 2020

3

Fiscal 20191

Echo-Day held on October 25, 2023

47

JGC Report 2023

JGC Report 2023

48

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Reinforcing Management Resources for Continuous Growth

Human Capital Initiatives
Three-party department organization (OJT)

2. Training for advancing and diversifying skills
The JGC Group provides strategic training to give human resources a competitive edge as soon as possible after they arerecruited. In order to build up a diverse human resources portfolio capable of achieving the 2040 Vision, the JGC Group provides young employees with a strategic OJT program and various Off-JT training like level-based training, and programs that
foster self-development. We are focusing in particular on OJT programs for young employees that facilitate development while
engaged in work duties.

Overall image of training for advancing and diversifying skills

OJT

Off-JT
Level specificSelected
employees

Company-widetraining

Career Development Plan
(CDP)Management-leveltraining
Introductory training

External
management
course dispatch

IT

Human skills

Cross-industrial
exchange program

Compliance

English andcommunication skills

Loan transfer,
leave

Technical expertiseInternal/external
company dispatch

Baysix system for engineering
backgrounds
Rotation system foradministrative backgrounds

E-learning platformJGC University

External course subsidy
system

On-site dispatch system
Instructor system

Technical college(internal, external lecturers)

Qualification acquisition
assistance system
etc.
Total annual training (FY2022): 50,871 hours
Training per person (FY2022): 17 hours

OJT (young employee training system)
In addition to creating career development plans aimed at giving young employees in regular positions and non-management
roles a competitive edge as fast as possible, we are working on building the foundation for the diverse human resources
portfolio that will be required in the future by providing strategic training for young employees through OJT at work, including
training programs for both humanities and engineering backgrounds, or the on-site dispatch system.

Department Manager

CDM

Self-development

Young employee training system
Regular positions andnon-management roles

Rotation system for advancing
and diversifying skills

The JGC Group provides a workplace environment where department managers
can focus on creating transformation and vision for their departments, and leading their strategies. This is bolstered by Project Coordination Managers (PCM) who
lead members assigned to each project, and Career Development Managers (CDM)
who are responsible for human resources development. In particular, CDMs organize
various types of meetings with whom applies to the Baysix system, CDP, on-site
dispatch system and other programs.

PCM

Career Development Plan (CDP)[Purpose & Overview]	Employees describe their current situation and the image they are aiming to achieve, and outline their deficiencies in skills, experience, mindset, and other factors required for performing
work, to encourage self-awareness and individual career development. Fostering communications with 1-on-1 career discussions between superiors (development coach) and subordinates while creating a CDP provides growth opportunities in line with what the subordinates
are seeking, and cultivates their awareness.

Rotation system for advancing and diversifying skills[Purpose & Overview]	To develop a diverse human resources portfolio, this consistent program of recruitment, allocation and training linked to CDP allows young employees to build up their career in an
independent manner. This system provides the foundation for developing the skills for understanding diverse perspectives, same level of knowledge and experience as outside experts,
and a broad outlook and profound insight.
[Procedure]	
Rotation in line with courses after three to four years corresponding to factors, such as evaluations during recruitment selection, individual preferences, and state of company allocation.
Purpose Journey training is provided before and after rotation, with the aim of defining My
Tagline for a management role.

Management Role

On-site dispatch system

Career Development Plan
(CDP)

6th yearYoung employees

On-site dispatch system[Purpose & Overview]	All new graduate recruit are stationed up to half a year at project sites overseas or in Japan,
or at operating companies within three years of entering the company, to build up extensive
experience.

7th year and on

5th year
4th year
3rd year

Rotation system for advancing
and diversifying skills
Baysix system for engineering
backgrounds
Rotation system foradministrative backgrounds

Instructor system[Purpose & Overview]	Gives young employees a competitive edge for those two years after entering the company
as new graduates.

2nd year
Instructor system
1st year49

JGC Report 2023

JGC Report 2023

50

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management Resources for Continuous Growth

Human Capital Initiatives

3. Promoting retention

Enhancing human resources engagement

Key items are defined and implemented with the aim of boosting the retention rate of skilled human resources over a long-term span.
Turnover rate

Key items■ Align with Company
philosophy and strategies■ Improve training systemand sense of growth■ Improve satisfaction withwork details■ Improve compensation andtreatment

October 2021 toSeptember 2022

4.8%

October 2022 toSeptember 2023

3.8%

To enable human resources of the JGC Group to make the most of their own capabilities toward achieving the 2040 Vision, abroad range of measures are implemented for increasing motivation by making purpose personally relevant, developing rewarding systems, promoting inclusion and diversity, and creating a comfortable workplace environment.

4. Training for human resources succession
A candidate selection and training program is provided to identify three levels of succession of human resources, and creating
evaluation axes and methods.
S1: Candidate CxO for next term

Level

Applicable toManagement/Coordinating Body

S1

Presidents of operating companies

JGC Holdings Nominating Committee

S2

General manager classGroup-wide operation and management

S3

Department manager classOperating company operation andmanagement

Creating a comfortable workplace environment

In addition to instilling the JGC Group's purpose, "Enhancing planetary health," we provide "Purpose Journey training" with the aim of having employees renew their own senseof purpose and pointing out items in common with the company and each individual.
Initiatives include a program for exploring the employee's own sense of perspectives,
an aptitude test for analyzing oneself from objective and quantitative metrics, and a
program for identifying personal qualities and strengths from individual lifeline charts.
Participants discuss with each other about the background of the company's purpose,and find areas in common between the company's purpose and their own individual
purpose, to create their My Tagline in around 15 words.
A survey conducted after training indicated that the level of satisfaction regarding ourGroup's purpose grew from 2.57 points before training to 4.13 afterwards—ample evidence of positive results.

Individual'sCompany's

purposepurposeS2: Candidate general managers
and executives for next term
S3: Candidate department
managers for next term

My Tagline

JGC Group's level of satisfaction with Purpose
Before training

After training(People)(People)P. 69 Corporate Governance: Succession plan
120

TOPICS

We recognize the importance of providing training for human resources for project execution for EPC projects in the
Total Engineering Business, particularly project managers (PM) who serve as project supervisors, and others who headvarious functions. Continuous training of applicable candidates is monitored to provide extensive professional experience over the medium to long term.

Entering the Company ~ 30s

Project

JV organization
Construction
management

DesignCostestimation
andplanning

External experience and training

Overseas subsidiaries
Corporate dispatching
Internal and external
training programs

30s ~ 40s

Small- tomedium-scale
PM

Large-scale
PM assistant

40s ~ 50s

Average Rating

180

120

60

90

40

60

20

30
1

2

3

4

5

4.13

150

80

0

Project manager career path

Job Rotation

2.57

100

Training of human resources for project execution

0

Average Rating

1

2

3

4

5

2. Developing rewarding systems❶ Introducing a new personnel system

Large-scale
PM

Overseassubsidiaries
PM

Creation and implementation of a human resources training plan based ona human resources vision looking toward the future

JGC Report 2023

Promoting inclusion and diversity

1. Making purpose personally relevant

A system suited to mid-career recruits within their third year, or new graduate recruits within their sixth year of entering thecompany, this new networking program introduced from fiscal 2023 allows them to perform their duties while creating their own
vertical, horizontal and diagonal connections.
Panel discussions and other types of dialogue enable participants to learn more about the culture of the JGC Group, whileregularly holding various sessions and social gatherings to encourage retention of human resources by not only facilitating
vertical connections between superiors and subordinates, and horizontal connections between colleagues or contemporaries
who entered the company at the same time, but also building relationships with diagonal connections.

51

Developing rewarding systems*B ased on a denominator of approximately 3,000 employees at the four
companies: JGC Holdings Corporation, JGC Corporate Solutions, JGC
Corporation, and JGC Japan Corporation* Only employees under 65 years old retiring for personal reasons

Networking program

For details on S1, see

Making purpose personally relevant

Holding company top management

Operating companies’ management

Project Staff Administration Department

Department of human resources management (office)

We believe that this unwavering dynamism and an ambitious corporate culture cannot be attained unless each of our members takeon and persist in challenges. In fiscal 2022, we updated the personnel system that eliminates the seniority-based aspects and insteademphasizes the significance of duties, such as job responsibility. Based on the core concept of Pay for VALUE, the value or results brought
about by each individual is reflected in bonuses and salary. We also provide allowances corresponding to the value of performed duties.

❷ Promoting initiatives for external assignments (cross-border)
We have developed a corporate dispatching and seconding system to locations in Japan and overseas to create a more
rewarding working experience, and more than 130 employees are playing active roles in companies within and outside of theGroup at this point.
JGC Report 2023

52

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Reinforcing Management Resources for Continuous Growth

Human Capital Initiatives❸ JGC Family Day

B. Family Care

We have held the JGC Family Day since fiscal 2009 for employees and their children (elementary school students in Grades
4 through 6) with the aim of fostering understanding of work. In fiscal 2023, a total of 41 children took part in the program,including those from overseas.

The family care system in place helps members balance work with family affairs, childcare, and nursing care via sick/injured childcare leave, support for those raising children that includes up to two days off per month for childcare leave, and leave or shorter
working hours for childcare. The number of men taking parental leave has also been increasing year by year. For men and womenalike, the system supports career development mindful of life events.


P.85 ESG Data Highlights

Pre andpostnatal leave
Six weeks before childbirth,eight weeks after

PregnancyChildbirthChildcare leave
Until children reach the age of two

Childcare

Age 1

A案

対極・離れた位置に配置した円は、違いを受け入れる・個を認める・お互いに向Shorterworking hours for childcare
テクノロジーにより、人や仕事が繋がっていくイメージを表現した。

Until children finish elementary school
技術・冷静さ・テクノロジーをイメージした寒色系と、全ての人が対等であると柔らかい表現とし親近感や優しさが感じられつつもかつ、スマートさや凛々しさも

Age 2

Age 3

1st grade

6th grade

Available reduction in working hours until children reach the age of three: 1–3 hours
Available reduction when children are between three years old and sixth-grade age: 1–2 hours"Kurumin" certification

3. Promoting inclusion and diversity

The JGC Group companies received "Kurumin" certification as a "company that supports childrearing."

Basic Policy for Inclusion & Diversity
Recognizing that diversity and fairness are essential for everyone to thrive and work together effectively, the JGC Group has
established the Basic Policy for Inclusion and Diversity comprising the following principles, and it is committed to promoting thispolicy throughout all its entities and activities worldwide:• Treat one another with respect and value their opinions and experiences including their differences in nationality, race,
age, disability, gender, religion.
• Provide fair opportunities for career development and skill development to all employees around the world.
• Cultivate a positive work environment with systems that empower all employees to maximize their potential and vitality.
• Promote the JGC culture of open communication, innovation, collaboration and teamwork by fostering an atmosphereof continuous personal and professional development, where diverse perspectives and experiences are shared witheach other.

❶ Promotion of women’s careersA. Actively promoting highly skilled women
The JGC Group is seeking to double the number (30) of
women in management positions compared to 2020 levels by2025, and the entire group is actively pursuing the promotionof highly skilled women in management roles.
P.85 ESG Data Highlights


Number and ratio of women in managerial positions*Fiscal 2020

Fiscal 2021

Fiscal 2022

1,221

1,256

1,267

Number of female
managers

30

35

39

Ratio of female
managers (%)

2.5

2.8

3.1

Number of total
managers

C. Participation in the "Rikochalle program" to cultivate potential female employees
We are also involved in nurturing future female Group leaders through participation in the "Riko Challenge (Rikochalle)", an initiative of the Gender Equality Bureau of the Cabinet Office, to support female students interested in science or engineering careers.

ParallelTechnologies

ParallelTechnologies❷ Promoting recruitment of people with disabilities
To advance and stabilize recruitment of people with disabilities, Group company JGC
Parallel Technologies Corporation was established in January 2021. Focusing on
IT operational support, JGC Parallel Technologies has a personnel system in place
for the convenience of those with disabilities. With 23 employees (of which 22 are
persons with disabilities) as of June 1, 2023, the Group-wide rate of employmentof people with disabilities is 2.46%, which is at a level that exceeds the statutory
employment rate (2.3%).

❸ Senior engagement and retention
The EPC business relies on proven engineering expertise, and we have long recognized the valuable experience of older
engineers who have been actively recruited. JGC took the initiative to raise the retirement age to 65 in 2015, enabling senior
employees to pass on expertise while bearing project responsibility and continuing to be compensated accordingly.

*A pplies to employees of JGC Holdings, JGC, and JGC Japan53

JGC Report 2023

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54

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Reinforcing Management Resources for Continuous Growth

Human Capital Initiatives

B. Childcare leave for male employees

4. Creation of a comfortable workplace environment❶ Initiatives for those posted overseas
A comprehensive range of initiatives are available for employees posted overseas, with the view of boosting the appeal andcompensation of business trips and positions stationed overseas in the Total Engineering Business.

With a growing number of people taking childcare leave and more households where both partners are working, we are creatinga workplace environment and supportive systems that allow male employees take childcare leave.
P.85 ESG Data HighlightsChildcare leave (men)PurposeRate of Utilization

Participants

Taken

69%

93

64

* As of the end of fiscal 2022

❶ Provide more extensive experience, including positions overseas, to facilitate employee career formation❷ Improve the working environment and compensation for overseas positions, giving employees a more rewarding
experience and sense of pride❸ Provide comprehensive lifestyle support for family members to suit each employee's life stage

Specific Initiatives● Shorter cycles for overseas postings
Postings overseas exceeding 2 years are determined based on the employee's intentions to suit their life stages, such as
marriage, childbirth, childcare or nursing.

C. Encouraging employees to take paid leave
In addition to regular days off every month, measures are in place to encourage employees totake an extra day off for a three-day weekend, to cater to more flexible work styles. In a standard
month (based on 30 days) made up of four weeks, employees would work for 22 days and haveeight days off. This system encouraging employees to take paid leave is called "921", as taking
an extra day of leave results in nine days off and 21 days of work. We are taking steps to makesure employees are aware of this system, particularly in June and December when there are no
public holidays available.

● Enhanced home leave

Internal poster for 921 system

The length of home leave available for single employees or those posted alone to construction sites overseas has beenchanged from 12 weeks overseas and 2 weeks home, to 10 weeks overseas and 2 weeks home. After 2024, we plan to further
reduce the vacation cycle, aiming to achieve a well-balanced and flexible leave system that harmonizes with different life stages.
Home Leave Cycle

Fiscal 2020 and On

July 2023 and On

Planned for July 2024 and On

Weeks on duty

12
2

10
2

8
2

Weeks on leaves● Care for family members at home
We have partnered with full-service housekeeping companies providing house cleaning, babysitting, nursing and other services
to assist family members in Japan with their childcare or nursing needs, or to reduce the burden on those posted overseas.

❸ Facilitating work styles and workplace environments
A. Telecommuting system
To maintain high productivity while respecting the work-life balance of each member, flexible work styles have been adopted
with relaxed restrictions on where and when work is done. Our basic approach is a hybrid style combining commuting andtelecommuting for greater convenience.

B. Shared offices❷ Extensive paid leave and other leave systems
A. Welcome Back system
Welcome Back system is available for employees who retired due to their spouse's relocation to new jobs or positions overseas(regardless of whether or not they are our company employees), on the assumption that they will return to work within 3 years.
In the past, such employees had to retire and rejoin the company, but the system has been changed from fiscal 2022 where
employees can select a new form of "leave." The system has been amended to provide additional flexibility where it has become
the norm for both partners to be working.

Feedback on the Welcome Back system

Eriko Ishii

My spouse was assigned to a position in Vietnam and we made the decision to move the five members of ourfamily together. My supervisor recommended making use of this system, so I submitted an application andleft Japan. The fact that I had kept in touch with my supervisor and colleagues while I was living in Vietnam,
and that the system gave me the opportunity to rejoin the same division as before helped to alleviate thepsychological stress associated with gaps in my employment after leaving the company. After returning
to the company, I was assigned as a member of a project controls department for a project in Malaysia.
I feel that being given the opportunity to utilize this system and experience living overseas with my family
has helped to broaden my perspective toward work at this company that has a high rate of people
stationed overseas.

Shared offices at the Yokohama Head Office offer a variety of areas for different purposes, including private booths, open spaces for discussions, and smart cubicles foronline meetings. This has inspired more flexible ways of working and stimulated internalinteraction, leading to new ideas and value.
Shared office (Yokohama Head Office)

C. Promoting employees healthIn addition to workplace vaccinations and other preventive measures during the pandemic, the JGC Group maintains several health programs, including regular stressassessment and the JGC exercise program, to facilitate the maintenance and improvement of employees' physical and mental health.
JGC exercise program

Project Controls Department
JGC Corporation

55

JGC Report 2023

JGC Report 2023

56

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Reinforcing Management Resources for Continuous Growth

Human Capital Initiatives

Human Resources Embodying Group Personnel Strategy
Naohiro Yasuda

Motokata Kai

Mechanical engineering major

Mechanical sciences and engineering major

Joined JGC in 2008

Joined JGC in 2005

Assigned to a department focused on overseas business after joining the company, hassince been involved in estimating, FEED and EPC as a project engineer on oil and gas
projects. Worked on-site in Saudi Arabia and the U.S., and is currently the engineering
manager of a construction project for the world's largest scale ethylene production plant
based in the U.S.

Q1
A1

Tell us about your feelings about project
management.
I feel that project management actually involves the
management of "people" rather than "things" or"money." At the end of the day, it is "people" whomanage the "things" and "money." EPC projects
cannot be accomplished by one person alone—in
many cases, they are achieved by hundreds or
thousands of people. The key to success is ensuringthat each and every person involved in the project isable to exert their maximum capabilities and achieve
their given task in line with a common goal. Project
management is about creating the environment thatenables this to happen. And naturally, unexpected
events accompany any type of project. When facedwith such situations, it is the role of project management to quickly identify the present conditions andindicate the direction the project should take in orderto prevent or minimize damage, and make decisionsbalancing the three factors of quality, schedule andcost in a timely manner.

Q3
A3

A2

57

Tell us about some of your experiences that
led to your own personal growth?
 hen I was working on a construction project for anW
ethylene production plant in North America in 2017,
Hurricane Harvey struck the site and also caused
severe damage around the southern regions of the
U.S. This disaster hit right before construction was due
to be completed, and while all our group employees
considered for a while returning home, we were allcommitted to seeing the project through to completionand decided to stay at the site. Instead, we worked
with our clients and joint venture partners to restore thedamage, which ensured the plant was completed as
quickly as possible. Despite such an unprecedented
situation where no one knew the best approach totake, we identified what needed to be done and thesteps required, and coordinated our efforts with theauthorities and partners. This was a valuable learning
experience for me, and it made me realize the need offinding the optimum solution to any challenge I face.

JGC Report 2023

 project manager capable of continually showing theA
way to everyone involved in their project. As I mentioned

Q1

What type of work are you currently involved in?

A1

I am currently working on the "Large-scale Alkaline
Water Electrolysis System Development and Green
Chemical Plant Demonstration" and "Research anddevelopment of large-scale external thermal ammonia decomposition hydrogen production technology"
projects funded by the New Energy and Industrial
Technology Development Organization (NEDO). I
am also involved in studying investments in venture
capital funds that invest in hydrogen-related venturebusinesses with the aim of unearthing technologies
and businesses. In addition to this, I am a member of
Sustainable Solutions established under the overseas
operating company JGC Corporation where I assist
with securing orders for EPC projects in the hydrogen/fuel ammonia sector, and I am also involved in establishing business development organizations with theview to entering the hydrogen/fuel ammonia business.

earlier, projects are only successful when a diverse
range of personnel are able to work to the best of theirpotential and capabilities. Yet there is always morethan one way of approaching things. The important
thing that leaders should keep in mind to ensure that
their project is a success is to stick to a common
goal, but not limit themselves to a single way of doing
things. Keeping options open to suit the characteristics of each individual allows each person to come up
with creative ideas and a more rewarding approach
while guiding them toward a common goal—this is thetype of leader that I am also striving to become.

Q4
A4

Q2

What is the ideal character for a project
manager?

Assigned to the Heating Department after joining the company. Engaged in projects
in Japan and overseas. Stationed at JGC Philippines, Inc. and Qatar natural gas processing facilities before being transferred to the Technical Development Department.
Involved in ammonia technical development and demonstration projects. Subsequently
moved to the Sustainability Co-Creation Department in 2020 to supervise the hydrogen/fuel ammonia business.

What goals lie ahead?
First up is completing the projects I am currently incharge of as planned, and creating an atmosphere
where all the clients, subsidiaries and members working on the project—myself included—can look backand feel happy that there were involved in the project.
I feel that project management skills refer to the ability
to leverage those skills no matter the scale or field of
the project. I want to further hone the project management skills I have developed to get closer to the ideal
image of a leader and making any type of project I am
working a successful one, even beyond those in theoil and gas industry. I also want to think about the best
way to pass on my own experiences to help train thenext generation of personnel as dependable projectengineers.

Q2

A2

Those roles differ to the traditional fields andbusiness models that the JGC Group has
been engaged in—what aspects do you findchallenging?
 he JGC Group is currently aiming to secure EPC
T
contracts in the hydrogen/fuel ammonia sector, while
also taking part in projects geared toward orders as abusiness operator contributing capital. I am engaged
in discussions about how to deliver new value from theperspective of a business operator and EPC contractor. Blue ammonia projects are currently mainstream
in the hydrogen/fuel ammonia sector, but this is
expected to transition to green ammonia in the future.
The Group is involved in a green ammonia demonstration project in Namie Town in Fukushima Prefecture. I
think we will be able to provide a broad range of value
regarding green ammonia, including our know-how as
a business operator, systems under development and
EPC, so I want to focus on building up the know-how
and knowledge for commercializing green ammonia
with the view to expanding the sector.

Q3

A3

What type of human resources do you expect
to expand into new fields and models in the
future?
An extension of the work I am currently involved inis business operations in the hydrogen/fuel ammonia
sector and the licensing business marketing our technology. We have internal departments covering thebusiness operations and finance aspects, so I think
it would be ideal with more human resources wellversed in business development and financing.
	  We also have a dedicated team for the licensing
business, but members actually engaged in executing
projects also work on EPC businesses. The required
background is the same for both these fields, but they
have a different business position. The licensing business is particularly sensitive to the latest technologies,
and calls for the generation of patents and improvements. In addition to the execution skills developedwith EPC projects, I am training human resources who
have the qualities of leaders, backed with the drive totake on new challenges, such as developing and commercializing new technologies through this work.

Q4
A4

What goals lie ahead?
 y ultimate objective is to take the projects I am workM
ing on through to commercialization and establish afirm foothold. One of the reasons I transferred to theTechnical Development Department was because
I was keen on taking up the challenge of creating
businesses with a sense of differentiation based ontechnology. As an engineering company, I feel that thelicensing business marketing our technology will be
the key to building on our current business operations
and generating value. I hope to train human resources
capable of leading this sector through the combinationof technical development and business development.

JGC Report 2023

58

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Reinforcing Management Resources for Continuous Growth

IP / Intangible Asset Initiatives

IP activities and sustainability

Basic stanceIntellectual property and intangible assets are emphasized by the JGC Group as a management resource for sustainable growth, and we are actively engaged in creating, protecting, and applying these assets and in associated risk
management.
A broad range of these assets built up through internal "creation of knowledge" and collaborative "fusion of knowledge" are used to expand existing business, develop technology licensing, enter non-EPC areas, and transform business through digital technology while ensuring compliance, respecting others’ rights, and minimizing our own risks.

The JGC Group is engaged in business activities and research and development activities aimed at achieving our purpose of"Enhancing planetary health." The ratio of intellectual property created through these activities that have led to patents related
to SDGs is increasing by the year.

Changes in active patents related toaddressing JGC Group materiality
and SDGs

Ratio of patents related to SDGs of active patents owned by JGC Group

Number of patents

Industry, Innovation
and Infrastructure236
232Internal "creation of knowledge"

JGC Group

Collaborative "fusion of knowledge"

225

Expanding existing business

17.1%
10.7%

Responsible
consumption andproduction

8.9%

Developing technology licensing

intellectual property and intangible assets• Patents, designs, and trademarks• Knowledge, know-how• Software, copyrights• Data• System-building capabilities

Climate action• Project management•T alent and organizational
strengths•C redibility, technical brands• Client relations

Entering non-EPC business areas
Transforming business throughdigital technology

Affordable and clean
energy

24.5%

2016

2019

2022

* Created with LexisNexis®PatentSight®

2025

TOPICS

Example of forms of usage of intellectual property and intangible assets

Protection of IP (IP mixture)

Expanding existing businessContributing to securing project orders in existing segments such as oil & gas,
renewable energy, and life sciences, expanding functional materials manufacturing,and ensuring a competitive advantage with the JGC Group's core technologies

Developing technology licensing

Expanding a license portfolio that includes low carbon / decarbonization, clean
energy, and chemical process technologies, and finding licenseesEntering non-EPC business areas

Co-creation for circular economy applications (with recycling technologies for plastic
and fiber waste and used cooking oil), entering new businesses (O&M, business
operations, etc.)

Transforming business throughdigital technology

One of the JGC Group's IP strategies is the "IP mixture" that protects our technologies and services in numerous
ways through rights and know-how such as patents, designs, and trademarks. Protection via IP rights and management of technical information, such as knowledge and know-how helps establish our brand of technical expertiseand create differentiated technologies, which leads to securing project orders.

Example of value creation for pharmaceutical production in the Life Sciences sector
Technical brand name(registered trademark)Suspended mobile device,rail shape (design registered)

Establishing "soft" business such as stable plant operation / higher productivity services, plant maintenance, and safety risk assessment; building systems to convert
tacit knowledge (including skilled engineers' experience, knowledge, and expertise)
into explicit knowledge

Implementing IP strategies linked to business and development strategies
Growth of current business and creation of new business is promoted by formulating IP strategies linked to our business anddevelopment strategies. The Group then repeats PDCA cycles for IP that integrate all three strategies.

Implementing a PDCA cycle for IP

Planning IP strategies

Business

Development

Strategies

Strategies

Integrating
3 strategies• Study prior technologies

Plan

Do

(research, rights
acquisition, technology
contracts) consistent with• Plan IP strategies

IP strategies

IP
Strategies• Reflect on the action• Adjust the course of IP

completedstrategy based on businessand development conditions
Preparing and applying our standard"IP PDCA sheet", which breaks down

Containment, air handling, layout engineering, etc.
(know-how)

Control system, mobile/
proximity mobile isolator (patent registered)Suspendedmobile isolator• Engage in IP work

• Understand business anddevelopment strategies

Example of construction
utilizing upper
suspension mount

ActionCheck• Review the strategies• Share with business /development departments

Social needs

Handling of highly
potent substances,such as anticancer
drugs is increasing in
the pharmaceuticalproduction sector, andthere is a growing need for"containment technology"
that helps to manage quality
and keep workers safe

JGC Japan Solution

Isolation system capable ofunprecedented level of containment

Development of "CONPAStainment®"
IP strategy

Multifaceted protection of technology toestablish a technical brand, based on theintellectual property mixture strategy

Value creation• Safe and reliable operation ofpharmaceutical manufacturing facilities• Prevents leaks of highly potent substances,and contributes to worker safety andenvironmental conservation• Expand and create business opportunities inthe Life Sciences sector

strategies into specific action plans

59

JGC Report 2023

JGC Report 2023

60

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Reinforcing Management Resources for Continuous Growth

Respect for Human Rights in Supply Chains

Basic stance

Summary of human rights risk map(applies to overseas EPC business)

Recognizing that a respect for the human rights of all people affected by our business is a fundamental principle ofour business, the JGC Group abides by internationally recognized human rights principles, such as the International
Bill of Human Rights and the ILO Declaration on Fundamental Principles and Rights at Work of the International Labor
Organization (ILO). In addition to the Group executives and employees, we ask all stakeholders throughout our supply
chains to respect human rights, in line with the "JGC Group Code of Business Conduct" and our "Basic Policy for
Human Rights & Development."

High

Framework for promoting human rights
JGC Group Board of Directors
Reports toOversees

Sustainability Committee
Oversees

Reports to

Human Rights & Development
Subcommittee

Collaboration

I&D
Subcommittee

Under the Sustainability Committee chaired by the chairman
and CEO of JGC Holdings, the JGC Group has establishedthe Human Rights & Development Subcommittee as part ofour human rights framework.
To promote a unified, group-wide approach to humanrights, the subcommittee consists of senior executives of main
Group companies and works with the I&D* Subcommittee
led by a human resources department. This ensures that
respect for human rights is part of our corporate culture.
* I&D: Inclusion & Diversity

Likelihood■■ Freedom of work and employment
security[Categories (in order of having a potential impact)]■ Construction and design partner company ■ Materials procurement source■ Site and office employees ■ Local residents■■■ Harassment■■ Inappropriate compensation, unpaid
living wages■ Right to an adequate standard of living
and health■■■ Overwork and long working hours■ Right to an adequate standard of living
and health■ Forced labor■ Health and safety■ Forced labor■ Health and safety■ Health and safety■ Workplace discrimination■ Human rights of local residents■ Child labor■ Health and safety■ Forced labor■ Child labor■ Forced labor

Low
SeverityHighRaising awareness of human rights through internal training
We held "business and human rights training" for executives and employees in fiscal 2022 withthe aim of increasing understanding of the social responsibility required of companies to ensurethat each and every employee respects human rights. while we also recognized the importanceof management expressing their own attitudes toward human rights during discussions between
external human rights experts and management during training. This higher level of awarenesstoward human rights within the company increases the effectiveness of human rights due diligence to be conducted in the future.

"Basic Policy for Human Rights & Development" on the JGC Group website
https://www.jgc.com/en/about/policies.html

Comment from Lawyer Akiko Sato, who participated in business and human rights training

Human rights due diligence
Create human rights risk map and identify issues (create based on the UN Guiding Principles Reporting Framework)
In fiscal 2022, we conducted desktop studies for EPC
Business in Japan and abroad to shed light on all stakeholders throughout the supply chain, so as to identify humanrights issues that present risks to the JGC Group's businesses. Each detected issue was categorized on the basisof severity and likelihood of occurrence, to create a humanrights risk map. Response policies and plans are developedin accordance with the "Guidelines on Respect for Human
Rights in Responsible Supply Chains" released by the~ Fiscal 2022

Japanese government, with initiatives slated to be rolled out
from fiscal 2024 to address the detected issues in order ofseverity and likelihood of occurrence.
Ahead of implementing the above plan, we have started
screening by sending questionnaires to suppliers of ouroverseas businesses that use certain construction materials
deemed to have extremely high human rights risks, in orderto verify their attitudes toward human rights and their supply
chains.

Fiscal 2023

Fiscal 2024 ~Assess human rights risks

Verify effectiveness
Disclose information,communicate externally

Future issues to be addressed and direction

JGC Report 2023

Building Responsibly (BR) initiatives
Worker Welfare is drawing increased attention in the oil andgas industry that involves hazardous work. JGC Corporation
joined Building Responsibly (BR), an organization committed
to protecting construction workers' rights and respecting

their welfare, and promotes respect of human rights for workers in the industry by establishing international standards andguidelines as a board member.

Presenting the importance of addressing human rights at construction sites,at an APEC conference

Implement risk reduction measures

61

United Nations Development Programme
Liaison Officer(Business and Human Rights project)

TOPICS

Study risk reduction measures

Specific initiatives for risk reduction measures will be implemented going forward, based on the created human rights
due diligence process and proposed measures. Furthermore,

Lawyer Akiko Sato

Establishing the Human Rights & Development Subcommittee within the JGC Group Sustainability
Committee, creating policies on human rights, holding associated training and running human rights due
diligence to identify and respond to specific human rights risks is in line with the United Nation's guiding
principles. From the stance of business and human rights, existing internal initiatives need to be revised
from the perspective of human rights, and the impact that business has the human rights of the company
as well as all stakeholders throughout the value chain, including overseas, needs to be identified based ona human rights policy that reflects the level of commitment of the management team. To achieve this, aninternal culture needs to be nurtured based on the common language of human rights, with medium- tolong-term action plans developed and revised regularly, and above all else, engaging in dialogue withthose affected. I hope to see enhancements made to the current initiatives, while also addressing global
issues such as social structural problems like minorities, climate change, biodiversity, and conflicts fromthe perspective of human rights, and make further improvements to the system by incorporating corrective
actions and remedial measures.

the human rights due diligence process currently being implemented for the EPC Business will be applied to functional
materials manufacturing companies from fiscal 2024.

A member of the JGC Corporation Construction Department participated in APEC's Human
Resource Development Working Group held in the U.S. in May 2023, and gave a presentation about IIF activities* in place at our current LNG Canada Project, and took part in thediscussion session. The presentation covered on-site IIF activities, and was praised highly
by BR. IIF activities at construction sites are a way of creating a working culture of ensuring
care for construction workers, and help to improve Worker Welfare.
* IIF activities: Incident & Injury Free. This is a method of creating a culture of safety on worksites, developed by safety consultant JMJ to ensure that everyone is able toreturn home without any injuries.

JGC Report 2023

62

Management Messages

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Reinforcing Management Resources for Continuous Growth

Reinforcing Management Resources for Continuous Growth

Occupational Health and Society

Quality Management System

Basic stance

Basic stance

The JGC Group positions Health, Safety, Security and the Environment (HSSE) performance as a corporate value thatis to be continuously pursued. To this end, we created our fundamental principle "to create safe, secure and healthy
workplaces in which all staff can carry out their functions with confidence" that not only applies to the JGC Group but
also to all workers at offices or construction sites in Japan and overseas, including partner companies, as we work to
implement HSSE initiatives throughout the Group.

Quality management is essential for safe operation and stable production at plants and other facilities. Under the ISO
9001-certified quality management system in place at the JGC Group, quality policies established by each company
form the basis for quality targets set at various organizational levels. After organizational issues are identified, quality targets and action plans are formulated, implemented, evaluated, and improved in PDCA cycles for continuous
improvement of organizational performance. Each company of the JGC Group ensures quality through systems andhuman resources that bring together valuable knowledge and skills built up over many years.

Framework for managing occupational health and safety

HSSE management framework
EPC operating companies and functional materials manufacturing companies
have developed their own health and safety policies based on the above fundamental principle, and established a Health and Safety Committee or HSSE
Committee to develop a health and safety management system, which deliberates on and addresses key topics related to HSSE. The Health and Safety
Committee or HSSE Committee of each group company conducts activities
aimed at reducing risks related to health and safety. In the event of a majordisaster, the Occupational Health and Safety Management Department of eachgroup company address the incident quickly and urgently contacts our relevant
departments—we have a system in place that provides support if necessary.

 ramework for quality management at
F
Group companies

JGC Holdings

JGC CorporationJGC Japan(Overseas EPC
operating company)(Domestic EPC operatingcompany)

Health Committee

Health Committee

HSSE Committee

Quality assurance committees or similar bodies are established at each Group company, and meet regularly.
The committees implement continuous improvements toensure that quality of the products and services provided
remains satisfactory, which includes investigating the root
causes of any quality issues and preventing recurrence.
The committees also evaluate these measures, as ongoing
improvements are made.
In maintaining this framework for quality assurance,
quality management activities are reviewed annually by thepresident of each company.

Functional
materials
manufacturing,othersHealth and Safety
Committee

HSSE Committee

Increasing performance of occupational health and safety
The JGC Group increases the performance of occupational health and safety from two angles—raising awarenessof health and safety, and enhancing knowledge and expertise on health and safety. Raising awareness of healthand safety involves boosting awareness at all offices and construction sites in Japan and overseas by holding
various events, such as the HSSE Competition organized by the President of JGC Holdings Corporation. Enhancing
knowledge and expertise on health and safety involves providing education on health and safety environments to
new recruits and employees assigned to sites for the first time, as well as HSSE audits at construction sites inJapan and overseas.

HSSE Conference in 2022

The Group’s high safety record at construction sites in Japan and overseas attests to our constant commitment to safety as a core value shared by all
members. Sites in Japan maintain a lost-time incident rate*1 below the industry average for general construction, and overseas sites have outperformed theannual lost time injury rate LTIR*2 of construction companies outside Japan as reported by the International Association of Oil and Gas Producers (IOGP)*3.
*1 LTIR: indicating the frequency of lost time injuries, is a safety benchmark in Japan representing the number of injuries due to workplace accidents per million actual working hours.
*2 LTIR: Lost Time Injury Rate is an Occupational Safety and Health Administration (OSHA) of the U.S. metric for calculating the number of injuries that result in time away from work, andindicates the frequency of lost time injuries per 200,000 hours.
*3 IOGP: The International Association of Oil & Gas Producers compiles safety records of construction companies in the oil and gas industry

Injury frequency at construction sites of JGC Japan
compared to the domestic construction industry
1.69

1.8
1.6

1.30

1.4
1.2

1.39

LTIR of overseas sites of JGC Corporation compared to
IOGP (Contractor)
0.06

1.47

0.05

1.09

0.03

0.8

0.87

0.6

0.51

0.52

2018

2019

0.2
0

0.39
2020

Domestic construction industry (general contractors)
Domestic construction sites of JGC JapanJGC Report 2023

0.056
0.048

0.044

0.048

0.04

1.0

0.4

0.052

0.02

0.47

2021

0.024

Quality management framework at each company
Each PresidentManagement Review

Quality Assurance Committee
or Other Body

Business Department /Division / Section

Lessons Learned—Leveraging valuable knowledge built up over the years

High worksite safety performance63

JGC Group's Growth Strategy

0.020

0.023

The JGC Group continually adopts ideas and initiatives for leveraging the knowledge and experience gained from past successes
or failures (LL: Lessons Learned) to new projects.
The overseas EPC operating company JGC Corporation has
developed the Corporate Lessons Learned (CLL) framework
based on the lessons garnered from past projects, and provides
it company-wide as a means of preventing severe quality problems. All employees are given the opportunity to learn more using
CLL, and the CLL courses in particular have been taken by aPanel discussions at Quality Day
total of more than 11,000 employees including overseas groupcompanies—all employees are united in our commitment to raising awareness of prevent quality problems from occurring. TQI(Think Quality Initiative) activities that forge a culture where everyone works to increase quality, are part of initiatives
aimed at increasing quality performance, and include an annual Quality Day where employees have the opportunity to
get together to openly discuss ideas that can help improve quality beyond existing frameworks.
The domestic EPC operating company JGC Japan Corporation holds a general operational meeting attended byexecutive level personnel, which includes a session called LL Discussion that covers past examples and ways toprevent problems with defects in the future. LL Communication shares details of defects to all employees across theorganization, as part of ongoing efforts to raise awareness of quality.

0.010

0.014

0.01

2022

(FY)

0

2018

2019

2020

2021

2022

(FY)

IOGP (Contractor)
Overseas sites of JGC CorporationJGC Report 2023

64

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Reinforcing Management Resources for Continuous Growth

Corporate Governanceflexibly and rapidly to market characteristics and seek further business expansion. This is intended to maximize corporate value
and ensure optimal allocation of management resources for the Group as a whole while enhancing transparency of corporate
management and strengthening overall Group governance. Committees have been established to deliberate key Group matters,
and an executive officer system has been introduced to ensure efficient managerial decision-making and execution.

Basic stance
The JGC Group remains aware that, sound governance is the foundation of management for sustained growth. We are
therefore strengthening our corporate governance, which we view as a material issue.
Our central mechanism for corporate governance is the Board of Directors. Its governance structures, functions,and roles are continuously reviewed, with Board effectiveness analyzed and assessed each year as we seek progress
through steady improvement.
In regulatory compliance and other matters essential to appropriate corporate governance as well, our purpose andvalues call on each employee and officer to maintain high ethical standards in everything they do, so that the Group
as a whole works to enhance medium- to long-term corporate value and achieve sustainable growth.

Improvement Status of Internal Control System
JGC Holdings’ Board of Directors determines the basic principles of the internal control system and revises them as necessary.

Improvement status
1. The Internal Auditing Department monitors, evaluates, and improves the effectiveness of the internal control systems of JGC
Holdings and the JGC Group and conducts separate audits as necessary
2. Rules of Management Authority regulate the duties and authority of each role, and clarify the system of responsibilities incorporate management and business execution
3. Management rules for Group companies have been formulated and implemented to ensure efficient and appropriate operations across the Group

Response to the Corporate Governance CodeOutline of the corporate governance system

We implement all principles laid out in the Corporate Governance Code and provide disclosure according to all 14 general principles, and supplementary principles required by the Tokyo Stock Exchange as stipulated in the revised Corporate Governance
Code of June 11, 2021, and are making steady efforts to further solidify our corporate governance.

JGC Holdings maintains a board of directors and an audit and supervisory board. The JGC Group has adopted a holding
company structure under which operating companies pursue the Group’s core business.
Separating management from execution provides greater clarity on roles and responsibilities of the holding company and operating companies. The holding company’s role is to formulate management policies and oversee the operating companies from a
medium- to long-term Group perspective. Operating companies apply the Group management policies and strategies to respond

A Corporate governance report is available on the JGC Group website. (Only in Japanese)
https://www.jgc.com/jp/ir/ir-library/corporate-governance.html

Corporate governance system
Shareholders Meeting
Appoints/dismisses

1

Meetings:

Generally
monthlyBoard of Directors
Head of organization:
Chairman and CEO Masayuki Sato

* For fuller discussions, others also attend as needed, such as operating company officers, executive officers in charge of certain areas, and those in relevant divisions.

Deliberation, reporting
Meetings:2

Nominating

Annually

2

Committee

Head of organization:
Outside Director
Masayuki Matsushima

Selects, oversees

Group Steering Committee
Head of organization: Chairman and CEO Masayuki Sato2

Sustainability Committee
Head of organization: Chairman and CEO Masayuki Sato

Meetings:

Generally
monthly

Deliberation,
reporting

Board

3

* In order to improve fairness and transparency, the majority of
the committee consists of outside directors.

Reports to

Audit & Supervisory Board

Generally
monthly

Chairperson: F ull-time Audit &Supervisory Board member
Yasumasa Isetani

Appoints/
dismisses

Group Investment and Loan Committee
Head of organization: Chairman and CEO Masayuki Sato4

Group Risk Management Committee
Head of organization: President and COO Tadashi Ishizuka

Meetings:

3 Group Investment

and Loan
Committee

Meetings:

Generally
monthly

Other
Departments

Internal Auditing
Department

Collaborates

Meetings:

Domestic business

Others4 Group Risk

Formulates Group policies
and action plans related tosustainability; deliberation toevaluate and promote action
supporting sustainability

Consists of members such as Group
company officers appointed by thechairperson
Chairman and CEO Masayuki Sato
Consists of members proposedby presidents and chairpersons ofGroup companies and approved by
the president of their company

Standing members: Seven directors, executive officers, and auditors of the holding
Deliberates on holding company
company and the Group companies
and Group investment and lendNon-standing members: Three execing projects
utive officers of the holding company
may attend, depending on the agenda
Understands and organizes risks
posed to the Group as a whole,develops and maintains a groupwide risk management system,and proposes and deliberates on
improvements

President and COO Tadashi Ishizuka
Members appointed by the chairperson, and members appointed by thechairperson based on recommendations by the presidents of each
operating company* CPAs Takemitsu Nemoto, Atsushi Nagata, and Takashi Inoue of KPMG AZSA LLC audit JGC accounts.
Auditing support is provided by nine other CPAs and 16 assistants

Deliberation, reporting

Functional Materials
Manufacturing BusinessAccounting Auditors*
Management
Committee

AuditsGenerallybi-annuallyGroup Companies

JGC Report 2023

1 Group Steering

Chairman and CEO Masayuki Sato
President and COO Tadashi Ishizuka
Auditors (rotating)Committee

Generallyannually

Corporate administration, internal control

65

Members

Reports on and discusses the
direction that the Group shouldtake as well as steering matterssuch as management / businessstrategies for the Group asa whole and each operatingcompany

2 Sustainability

Representative Director
President and COO(Internal auditing)Overseas business(energy, infrastructure)

PurposeCommittee

Shareholders Meeting3• Discusses or resolves issues based on reports of key auditing matters• Presents opinions based on the results above to directors or the Boardof Directors as necessary

Body(two inside auditors, three outside auditors)

Representative Director
Chairman and CEO• Deliberates on appointment and dismissal of officers, remuneration,
etc.

Meetings:(Two inside directors, three outside directors)

Deliberation, reporting• Resolves key matters of business execution• Oversees directors’ executive actions• Deliberates on medium- to long-term strategies and issues

3 Audit & Supervisory

Annually(and as needed)

Committee

Head of(Two inside directors, three outside directors)organization:* In order to improve fairness and transparency, the majority
Shigeru Endoof the committee consists of outside directors.
Outside Director

1Remuneration

1 Board of Directors

Remuneration
Committees

AuditsMeetings:(and as needed)

Purpose2  Nominating andAppoints/
dismisses(Four inside directors, three outside directors, two inside auditors, three outside auditors)

Deliberation, reporting

Body

AuditsRepresentative
Director

Director

AuditorOutside Auditor

Outside Director(Male/Female)JGC Report 2023

66

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Reinforcing Management Resources for Continuous Growth

Corporate Governance

Board of Directors

Directors

Board functions
The Board of Directors is responsible for decision-making on medium- to long-term Group strategies and issues, and it provides oversight regarding business execution of the Group companies. Board composition is intended to enable effective andefficient execution of these functions.

Basic policy on Board composition and diversity
From the standpoint of further enhancing discussions on medium- to long-term Group strategies and issues and of strengthening oversight regarding business execution of the Group companies, the Board consists of the following members.
 onsists mainly of directors with broad experience in business markets and directors with a high level of knowledge andCexpertise in EPC operations, which is the primary Group business2 Independent outside directors are appointed in order to incorporate outside perspectives in management, with the expectation that these directors will provide objective advice to the Board and fulfill oversight functions from an independent
viewpoint
As a matter of policy respecting the importance of diverse perspectives, members are appointed not solely based on professional experience and expertise but also on competence, regardless of nationality, race, or sex.

Masayuki Sato

Tadashi Ishizuka

Kiyotaka Terajima

Shoji Yamada

Chairman and Representative Director
Chief Executive Officer (CEO)

Representative Director, President
Chief Operating Officer (COO)

Director

Director

Shigeru Endo

Masayuki Matsushima

Noriko Yao

Outside Director

Outside Director

Outside Director

1

Skills Matrix of Directors (Four inside, three outside)
Name and position at JGC

Term asdirector(in years)

Outside director
attendance at Board
meetings in fiscal 2022

13

–

6

–

Audit & Supervisory Board Members 

Field
Corporate
management

Technology, project
management,
and IT

Globalbusiness

HR, human resource
development,
and labor relations

Finance andaccounting

Legal and risk
management

Yasumasa Isetani

Kazuyoshi Muto

Koichi Ohno

Norio Takamatsu

Kazuya Oki

Audit & Supervisory Board Member

Audit & Supervisory Board Member

Outside Audit & Supervisory
Board Member

Outside Audit & Supervisory Board
MemberOutside Audit & Supervisory
Board Member

Masayuki Sato
Representative Director, Chairman,
and Chief Executive Officer (CEO)Executive Officers

Tadashi Ishizuka
Representative Director, President,
and Chief Operating Officer (COO)

Kiyotaka Terajima
Director, Senior Executive Vice President,
and Chief Financial Officer (CFO)

Shoji Yamada
Director

Shigeru Endo
Outside director

Masayuki Matsushima
Outside director

Noriko Yao
Outside director

7

–

2

–

10

16/16
(100%)

7

15/16
(94%)

2

16/16
(100%)Name and position at JGC
Yasumasa Isetani
Auditors

Kazuyoshi Muto
Auditors

Koichi Ohno
Outside Audit & Supervisory Board Member

Norio Takamatsu
Outside Audit & Supervisory Board Member

Kazuya Oki
Outside Audit & Supervisory Board Member

Outside auditor
attendance at Board
meetings in fiscal 2022

5

–

2

–

9

15/16
(94%)

7

15/16
(94%)

0

–

JGC Report 2023

Masahiro Aika

Masaki Ishikawa

Takeshi Kawasaki

Executive Vice President
Chief Human Resource Officer(CHRO)

Senior Executive Officer
Technology Commercialization
Officer (TCO)

Senior Executive Officer

Executive Officer

Toshiyuki Karasawa

Yoshihiro Mizuguchi

Akihito Sawaki

Keiji Tanigawa

Satoshi Kurata

Executive Officer

Executive Officer
Chief Technology Officer (CTO)

Executive Officer
Chief Information Officer (CIO)

Executive Officer
Chief Digital Officer (CDO)

Executive Officer
General Counsel

Hiroyuki Morishima

Shinya Miyake

Executive Officer
Chief Manufacturing Officer (CMO)

Executive Officer

Skill
Field
Corporate
management

Technology, project
management,
and IT

Globalbusiness

HR, human resource
development,
and labor relations

Finance andaccounting

Legal and risk
management

Note: S election rationale for each skills matrix is shown on P. 68. The above list is not exhaustive or prescriptive, which indicates disciplines where directors and auditors can further
demonstrate their expertise, not all disciplines in which each director and auditor excels.

67

Takuya Hanada

Senior Executive Vice President
Chief Financial Officer (CFO)

Selection Rationale for Each Skills Matrix

Skills Matrix of Auditors (Two inside, three outside)
Term asauditor(in years)

Kiyotaka Terajima

Selection Rationale

Corporate
management

To achieve the goals of BSP 2025 and 2040 Vision in line with the Group purpose of “Enhancing planetary health,” the Group requires
directors experienced in establishing clear strategies for sustainable growth and higher corporate value even in a turbulent businessenvironment.

Technology, project
management, and IT

The Group requires directors with a high level of knowledge and expertise in our main businesses in order to pursue, manage, and oversee
growth strategies for sustainable growth and greater corporate value. Directors must also be highly knowledgeable and experienced in thefive business areas of Energy transition, High-performance functional materials, Circular economy, Healthcare & life science, and Industrial& urban infrastructure that will be essential in social issues we must begin to address to fulfill our purpose of “Enhancing planetary health.”

Global business

Implementing growth strategies and managing and supervising progress toward sustainable Group growth and higher corporate value
calls for directors with experience in overseas business management and extensive knowledge of and familiarity with everyday life, culture,business environments, and so on outside of Japan.

HR, human resource
development, andlabor relations

JGC Group employees are required to possess advanced technical capabilities and expertise, an appreciation of different cultures anddiversity in order to work with others of many nationalities, and a mental attitude that helps us make the most of our organizational
strengths. To this end, personnel management must be established that ensures peak employee performance, and the Group requires
directors with solid knowledge and experience in human resources management or development, including promotion of diversity.

Finance andaccounting

Beyond ensuring accurate financial reporting, the directors required by the Group must have reliable knowledge and experience in financeand accounting, as needed to build a strong financial foundation and to formulate financial strategies both for growth investments (including M&As) aimed at sustainable gains in corporate value and for higher shareholder return.

Legal and risk
management

A suitable governance system is fundamental to sustainable growth in corporate value. Moreover, to continue enhancing Board oversight effectiveness, the Group requires directors with solid knowledge and experience in corporate governance, risk management, andcompliance.

JGC Report 2023

68

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Reinforcing Management Resources for Continuous Growth

Corporate Governance
Message from Outside Director

Policies and procedures for senior management appointment and dismissal
Appointment of senior management and nomination of candidates for directors
1Deliberations of the Nominating Committee, which consists of a majority of outside directors and is chaired byan outside director, are focused on the following items.
(1) Qualities such as character and views(2) Senior management and inside directors: Qualities such as experience, performance, and management capabilities, as
defined in succession planning(3) Outside directors: Qualities such as independence and expertise

Appointment
process2

After comprehensive deliberation by the Nominating Committee, a decision is made by the Board.

Appointment of senior management and nomination of director candidates follows this process and involves ample
discussion before decisions are made, with the understanding that these individuals may one day be candidates tosucceed the CEO.

Dismissal of senior management

Dismissal
process

In the event of any of the following, the Board decides on dismissal after deliberation by the Nominating Committee.
(1) Wrongdoing, impropriety, or breach of faith(2) Violation of laws or articles of incorporation(3) Loss of the qualities and capabilities initially required for appointment

Succession plan
The following succession plan in place informed by discussions of the Nominating Committee and Board is beginning to be
initiated,reflecting the Group’s recognition of the importance of succession planning in sustainable growth of corporate value.

Purpose• T oward attainment of BSP 2025 and the 2040 Vision, and for lasting enhancement of corporate value beyond this, werecognize the necessity of appointing optimal directors and executive officers for the current business environment andmanagement strategies.
• Based on the business environment and management strategies, the plan clarifies the knowledge, experience, abilities, andpersonal qualities sought in top management, guiding development and selection of the Group’s next leaders and enabling
continuous appointment of these leaders whenever needed.

Stance on leadership criteria• In fiscal 2019, leadership criteria were determined through talks with current top management facilitated by a third-party
organization, and future needs in leaders are defined from a medium- to long-term management vision.

• These criteria are classified on minimum essential attributes and ideal attributes (three-level scale), and candidates are
assigned to groups with specific level requirements.
• The requirements of leaders were redefined in fiscal 2022 to suit changes in the business environment, and human resources
criteria was revised.

Stance on succession planning• T he basic stance taken on succession planning involves defining leadership criteria, selecting several individuals for nearand far-term candidate groups, providing opportunities to develop required attributes and gain experience, and monitoring
progress each year as candidates are groomed over the medium to long term.
• In line with the above approach, educational programs for near- and far-term candidate groups are enhanced and built uponby sending candidates to external educational and training programs or inviting external lecturers as part of ongoing lectures.

Assembling a potent management
structure to sustainably enhance
corporate value
Shigeru Endo
Outside Director[Reason for appointment]
Mr. Shigeru Endo does not have direct experience in corporate management, but he has served as the ambassador extraordinary and plenipotentiary to Saudi Arabia
and Tunisia and possesses extensive experience and knowledge of the Group’s principal business market. Appointment as outside director reflects the Group’s
determination that this experience and knowledge will be applied in appropriately performing the duties of providing accurate advice and opinions on management andbusiness and fulfilling a supervisory role from an independent standpoint, which will contribute to sustainable enhancement of corporate value.

Please refer to the JGC Group website for brief biography.
https://www.jgc.com/en/about/directors.html

In April 2022, the former Appointment and Remuneration
Advisory Committee was split into two separate committees—the Nominating Committee and the Remuneration
Committee—with each chaired by an independent
outside director, of which I was appointed to chair the
Nominating Committee. The committee currently comprises two inside and three outside directors as members.
In order to prevail through these uncertain times where
major changes are constantly afoot, determining how
to assemble a potent management structure capable ofsustainably increasing corporate value will be the key tothe future of the Company—the Nominating Committee isalso taking this to heart through its activities.
The primary responsibility of the Nominating Committee isto ensure objectivity, fairness and transparency when selecting members that make up the management structure. We
are requested by the Board of Directors to deliberate on theselection and dismissal of senior management such as directors and other executive officers, before providing our reply.
Over the past year and a half, we have been holding serious
discussions on the personal qualities required of directors,
executive officers and other members of top management,

as well as deliberating succession development planning andother matters.
We consider the fundamental essence of diversity as ensuring that each and every individual, from regular employees tothe management team, is able to perform to the maximum
extent of their capabilities, but we also see the significant potential of women in the workplace. Nurturing human resources isby no means an easy task. Yet it is impossible to foster true
leaders without putting in the required effort. More than simply
possessing knowledge of the manufacturing industry or theunique engineering aspects underpinning the JGC Group's
operations, people suitable for top management positions
need to be of a character fusing the perfect blend of decisionmaking capacity and drive, the ability to bring change and thepower of imagination, and integrity and grit. The ideal imageof a leader will no doubt change along with the circumstancesof the day. The top management also needs to be supported
by capable human resources. The office in charge of humanresources plays a crucial role in formulating, implementing andassessing succession development planning with a long-term
perspective, but I hope to see the Nominating Committee also
becoming involved in this process.

Cross-shareholdings
1. Purpose
The Group refrains from cross-shareholdings except incases where maintaining and strengthening relationships
with clients and business partners will contribute to higher
medium- to long-term corporate value for the Group. Each
year, the Board of Directors reviews the significance of maintaining each cross-shareholding, and both qualitative andquantitative aspects are reviewed. Quantitatively, TSR (total
shareholder return) and ROE are checked for each company,
as well as whether business advantages are commensuratewith the cost of equity. Sale of shares deemed to have losttheir significance is investigated accounting for the market
environment and changes in stock prices.

History of sales and reductions in cross-shareholdings since theintroduction of the Corporate Governance Code
Reduction ratesince FY2015(based on acquisition price)(Brand)
80

71

71

Approx. 37%
68

64

63

60

61

57

54

40

20

0

2015

2016

2017

2018

2019

2020

2021

2022 (FY)2. Basis for exercising voting rights
In exercising voting rights for cross-shareholdings, advantages and disadvantages are weighed based on whether the decision willcontribute to sustainable growth of the company involved, and thus, higher Group corporate value over the medium to long term.
Details on the review process of each holding objective are available on the JGC Group website.
https://www.jgc.com/en/esg-hsse/governance/corporate-governance/69

JGC Report 2023

JGC Report 2023

70

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Reinforcing Management Resources for Continuous Growth

Corporate Governance

Breakdown of executive compensation

Director compensation

Breakdown of compensation, etc.

Policy on determining director compensation amounts or calculation methods

Category

Basic policy, general shareholders’ meeting resolutions

Five directors•U nder a basic policy to secure the management personnel needed for greater global competitiveness and higher medium- to(excluding outside directors)

long-term corporate value, a resolution made at the 113th general shareholders’ meeting on June 26, 2009, set maximum
annual director compensation at ¥690 million, with maximum auditor compensation at ¥88 million.
• As for the policy on determining the amount, calculation, and breakdown of compensation for individual directors, compensation shall not exceed the range resolved at the general shareholders’ meeting, and details are discussed in advance by the
Remuneration Committee (which consists of a majority of outside directors and is chaired by an outside director), whose
report is considered by the Board to reach a decision.

Two Audit & Supervisory
Board members

Process for determining compensation• Inside directors, excluding outside directors, receive compensation comprising monetary compensation and stock compensation, where monetary compensation comprises fixed compensation and bonuses, and stock compensation comprises
restricted stock and performance share units.
• The compensation mix is designed to provide a higher proportion of variable compensation (bonus and stock compensation)
for higher performance and rank.
(Note) The introduction of performance share units was approved and passed at the shareholders' meeting held on June 29, 2023, so the above includes details of the discussed matter.

Stock compensation

Monetary compensation• Introduced the following two types of stock compensation so that directors
share the benefits and risks of stock price fluctuations with shareholders
and conduct business accordingly, and to further incentivize a higher stock
price and greater medium- to long-term corporate value.
• A malus and clawback clause has been introduced, where in the event thata corporate scandal such as violation of laws is identified, the Company
can seize some or all the stock compensation or request the return after thestock restriction is removed, based on deliberation by the Remuneration
Committee and approval by the Board of Directors.

Fixed compensation• Determined according to each director’s position and the value of their duties, accounting
for the capabilities required and the weightand impact of those duties.
• Consists of base compensation and an allotment for directors or representative directors,
both paid monthly.
• Outside director compensation is limited to
fixed compensation, to enable management
oversight from a position independent of business execution.

Performance Share Unit (PSU)

As compensation for responsibilities, restricted stock compensation is allocated inAugust, and on August 9, 2022, some 8,333 shares corresponding to 10% of basecompensation (equivalent to ¥13 million) were allocated to three directors in fiscal 2022.
• Outline of RS
Scope: Directors and executive officers of the holding company and directors ofGroup companies
Maximum monetary compensation: ¥190 million per year
Total shares of RS (maximum): 149,300 shares per year (approximately 0.06%
of total issued shares)
Restricted stock period: Set to 3 years up to 30 years

71

JGC Report 2023

Performance-based compensation

Restricted stock compensation

Number of eligible
executives

Total amountprovidedNumber of eligible
executives

Total amountprovidedNumber of eligible
executives

Total amountprovided¥278 million

5¥172 million

3¥92 million

3¥13 million¥36 million

2¥36 million

–

–

–

–

¥69 million

7¥69 million

–

–

–

–

Seven outside executives(four outside directors and threeoutside Audit & Supervisory Board
members)

Breakdown of executive compensation
Name

Masayuki Sato

Breakdown of compensation, etc.

Total value ofcompensation

Category¥105 million

Directors

Fixedcompensation

Performance-based
compensation

Restricted stockcompensation¥61 million¥38 million¥5 million

Note 1: Only those whose total amount of consolidated remuneration, etc. is ¥100 million or more are listed.
Note 2: The performance based compensation above includes the amount recognized as an allocation to reserves during the consolidated fiscal year for the provision.

Message from Outside Director

Compensation mix and details

Restricted Stock (RS)Fixed compensation

Note 1: As of the end of fiscal 2022, there were eight directors (including four outside directors) and five auditors (including three outside auditors).
Note 2: The performance-based compensation above is the amount recorded as expenses as allowances for the fiscal year ending March 31, 2022.

• To ensure fairness, transparency, and consistency with this decision policy, decisions by the chairman and CEO reflect theresults of comprehensive deliberation by the Remuneration Committee on evaluation of individual directors and the amountof remuneration.
• The compensation for individual directors within the range set at the general shareholders’ meeting is at the discretion of thechairman of the Board, who as the Company’s CEO is most familiar with the duties and responsibilities of each director, theirperformance, and the extent to which this performance contributes to higher corporate value.
• The Board has determined that final decisions have been consistent with this policy, and in making this determination, theBoard has been informed of a summary and results of Remuneration Committee deliberations, as well as final decisions by
the chairman and CEO.

• Compensation linked to results was introduced at the 127th ordinary general shareholders’ meeting held on June 29, 2023.
• According to the degree of performance achievement for the fiscal 2023,
common stock with a restricted period is planned to be allocated in Augustof the same year.
• Outline of PSU
Scope: Directors and executive officers of the holding company and directors of Group
companies
Performance evaluation period: 1 year (from April 1 to March 31 of the following year)
Performance evaluation period: Operating profit and profit attributable to owners of parent
Maximum monetary compensation: ¥650 million per year
Total shares of PSU (maximum): 959,000 shares per year (approximately 0.40% of
total issued shares)
Restricted stock period: Set to 3 years up to 30 years(excluding outside Audit &Supervisory Board members)

Total value ofcompensation,etc.

Director compensation

Up to¥690 million
annuallyBonus• Designed as a key incentive to meet performance figures each fiscal year and steadily
improve corporate value over the medium
and long term.
•
Individual bonuses are determined by the
Remuneration Committee from a baseamount (calculated for each position andindexed to operating income and net income
attributable to owners of the parent, which
are targets in the medium term businessplan) and individual evaluation (accounting for
responsibilities to fulfill in order to attain thelong-term management vision and mediumterm business plan).
• As a performance indicator, net income attributable to owners of the parent is weighted,
in view of the responsibility to shareholders
for results. It is weighted higher for those inhigher positions.
• Bonuses do not apply when there is a net loss
attributable to owners of the parent.

Securing human resources tolead the future is the top priority
Masayuki Matsushima
Outside director[Reason for appointment]
Mr. Masayuki Matsushima has extensive experience and knowledge in finance and corporate management, having served as executive director of the Bank of Japan and in other significant
positions. Appointment as outside director reflects the Group’s determination that this experience and knowledge will be applied in appropriately performing the duties of providing accurate
advice and opinions on management and business and fulfilling a supervisory role from an independent standpoint, which will contribute to sustainable enhancement of corporate value.

Please refer to the JGC Group website for brief biography.
https://www.jgc.com/en/about/directors.html

Securing human resources capable of leading thefuture is the top priority to ensure sustainable growthin corporate value for the JGC Group. To achieve this,I feel that transparency of the compensation systemfor employees and executives as well as incentivebased compensation focusing on performance will beessential. To ensure that this is achieved in an objective
manner, the process for determining the calculation
method for compensation and the policy defining thecompensation mix first involves deliberation by the
Remuneration Committee that comprises a majority ofoutside executives (and chaired by an outside executive), and then approval by the Board of Directors.
I would like to take this opportunity to expand on two
points in particular regarding the overall compensation
system of the JGC Group I have seen during fiscal

2023. The first is that the JGC Group has enhanced
company-wide well-being with efforts, such as raising the average salary to counter the 5% increase in
prices. The second is that stock compensation linked
to company performance has been introduced for
director compensation (to begin from fiscal 2024). The
introduction of this type of director compensation witha medium- to long-term view forms an incentive forattaining continuous growth in corporate value, which
in turn leads to benefits for all employees of the JGCGroup in what creates a positive cycle.
Going forward, we will continue creating a rewarding workplace environment with compensation tomatch each individual's capabilities and achievements,
while maintaining an eye on DEI (Diversity, Equity andInclusion).

JGC Report 2023

72

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Reinforcing Management Resources for Continuous Growth

Corporate Governance

Board effectiveness evaluation

Main efforts to date for improving Board effectiveness

Board effectiveness is analyzed and evaluated annually, efforts toward improvement are reviewed, and issues linked to further
gains in effectiveness are discussed by the Board in pursuit of continuous improvement. Presented below is a summary of theprocess for evaluating Board effectiveness in fiscal 2022, the state of initiatives based on the Board evaluation results of theprevious year (fiscal 2021), and future response policy based on these evaluation results.

FY2020

FY2021

FY2022Main Board andcommittee efforts• Revised Board rules and internal
decision-making rules to makeagenda item criteria more fitting forthe holding company structure• Held multiple Board meetings to
discuss the establishment of the2040 Vision and BSP 2025

• Basic policy on sustainability enacted,
Sustainability Committee established, andcommittee rules formulated by the Board• Improved the framework for monitoring andreview of measures in the medium termbusiness plan
• Revised Board rules and internal approval
procedures in accordance with clarificationof investment and loan categories andrevision and improvement of review andapproval procedures• Creation of Basic Policy for Human Rights &Development and Basic Policy for Inclusion &Diversity, and reporting on Sustainability Committee
activities, such as GHG reduction solutions at theBoard of Directors• Discussions on sustainable growth and increasing
long-term corporate value, including diversification ofbusiness portfolios, based on quantitative and qualitative monitoring of level of achievement of numericaltargets defined in BSP 2025 and estimated capital
cost value of each businessDirector training*• External seminars (workshops on“ambidextrous” management led
by a business school professor)• Internal workshops on EPC risk and financial
risk management• Internal workshops on new initiatives toward a
recycling-oriented society such as SAF production
business and biomanufacturing, estimation process
for the EPC business, and budgeting and cost review
processes when executing projects

Evaluation process1

Hold questionnaires
and interviews

Hold questionnaires for directors and auditors, and conduct interviews for directors
Main questions: Board composition, management, discussion, oversight functions, dialogue
with shareholders, own involvement, and management of Nominating andRemuneration committees* Policy on director training: JGC Holdings bears cost for provides opportunities and information for directors and auditors to acquire the knowledge and competence to fulfill their roles andresponsibilities.

2

Check improvement
conditions and issues

3

Exchange opinions• Check improvement conditions from previous fiscal year and new issues raised this fiscal
year, and analyze to further enhance effectiveness• Hold third-party evaluation by external consultant

Exchange views at the Board of Directors based on the results

Message from Outside Director

Improving effectiveness ofBoard of Directors
Noriko Yao
Outside director

Evaluation results
Survey and interview analysis and evaluation have indicated that the Board is functioning appropriately and effectively in its
current state. Details of the evaluation results are as follows.

[Reason for appointment]
Ms. Noriko Yao does not have direct experience in corporate management, but she possesses professional knowledge and keen insight as an attorney at law with extensive international
experience. Appointment as outside director reflects the Group’s determination that this experience and knowledge will be applied in appropriately performing the duties of providing accurate
advice and opinions on management and business and fulfilling a supervisory role from an independent standpoint, which will contribute to sustainable enhancement of corporate value.

Please refer to the JGC Group websit for brief biography.

Initiatives based on
previous year
(fiscal 2021) Board
evaluation results• Conduct effective monitoring and review of the medium-term business plan as a holding
company Board of Directors• Discussion of Group-wide portfolios from the standpoints of sustainable profitability andcost of capital

Future actions basedon these evaluation
results(1) Initiatives for more in-depth discussion at the Board of Directors in order to promote
growth in corporate value• Set discussion topic and create a suitable environment to ensure vibrant and thoughtprovoking discussions•E nsure deliberation time for following up with the medium-term business plan anddiscussing growth of the Group and improving corporate value• Information provided appropriately in a timely manner from the executive side isongoing or increasing•E xamine Board of Directors executive office functionality to ensure the above initiatives
are implemented(2) B egin examining the following to enhance monitoring of business execution in response
to expanding business portfolios.
•O rganize the roles, functionality and approaches of the Board of Directors undergoingincreased monitoring at the Company•O rganize the conditions required for the Board of Directors undergoing increased
monitoring73

JGC Report 2023

https://www.jgc.com/en/about/directors.html

A proper understanding and sharing of the facts andbackground information must be considered the prerequisites for extensive deliberation at the Board of Directors. In
addition to preliminary briefings for outside directors, the
JGC Holdings also holds workshops covering topics put
forward by outside directors. These provide the opportunity for outside directors and executives to hold lively Q&A
sessions, exchange views and acquire essential information, which helps to increase the level of understanding of
the underlying facts.
Outside directors also regularly coordinate information and exchange views with members of the Audit &Supervisory Board, and they also provide recommendations to the management team on how to run the Boardof Directors to ensure an even higher level of effectiveness, leading to a host of initiatives geared to make
improvements.
Board of Directors meetings held with these factors
in mind involve recommendations and discussions froma diverse range of perspectives, based on the special
expertise and experience of each individual executive
officer. I hope to see the Board of Directors implementa range of suggested improvements and ideas related

to the running of the meeting and discussions, to infuse
even more energy into deliberations held by the Board of
Directors.
Fiscal 2023 marks the mid-point of the mediumterm business plan "Building a Sustainable Planetary
Infrastructure 2025" (BSP 2025). The Board of Directors
also held constructive discussions on the awareness ofthe current business environments based on external
environmental factors, progress of key strategies, andstudied issues and priority actions, and conducted monitoring and review of BSP 2025 that was raised as a key
issue in the fiscal 2021 Board of Directors' effectivenessevaluation. Enhancing monitoring was identified as a key
issue in the Board of Directors' effectiveness evaluation
for fiscal 2022. Studying in detail the most effective format
and method of governance for the execution of operations
is essential for the JGC Group to create an even bettersystem, with an eye to the current situation and the futureof the JGC Group.
As an outside director, I remain committed to ensuring
the Board of Directors functions more effectively on behalfof shareholders, with the view to increasing long-term corporate value and sustainable growth of the JGC Group.

JGC Report 2023

74

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Reinforcing Management Resources for Continuous Growth

Risk Management

Basic stancePrimary Group risks and responses

Recognizing that appropriate risk management reduces losses and contributes to profits for the Group, we strive
to reduce and prevent risks routinely by understanding and organizing risks posed to the Group as a whole and bybuilding, maintaining, and refining our risk management system. If risks do materialize, we respond rapidly and appropriately to minimize the impact and associated loss.

Primary Risk Area

Nature of Typical Risks

Countermeasures

Risk associated withreceiving and executing
projects• Change of plans, cancellation, suspension, or postponement ofprojects in the Total Engineering Business after orders are received• Worsening financial conditions, insufficient project execution
capabilities, and defaulting in the portion of operations covered byjoint venture consortium partners as comprehensive engineering
projects are executed• Specific risk analysis by the holding company and operatingcompanies, monitoring of project progress and profitability• Deliberation of the above risks at the Board of Directors as necessaryCountry risk

• Impact on business activities from political instability, war, revolution,
domestic conflict, terrorism, sudden changes in economic policies orconditions, or economic sanctions• Use of trade insurance• Gathering information on country risk
• Setting reasonable contract conditions with clients, addressing force
majeure clauses and regulatory changes• Strengthening crisis management functions by the Crisis
Management Dept.

Risk associatedwithnatural disasters,
epidemics, etc.

• Impact on business activities from natural disasters of unforeseenmagnitude such as earthquakes, torrential rain, or typhoons, or fromglobal pandemics such as new strains of influenza• Establishing disaster response procedures, introducing systems toconfirm safety, and implementing disaster training• Gathering information on risk
• Taking necessary measures in response to official requests, confirming
safety in accordance with national conditions and regulations• Setting reasonable contract conditions with clients, addressing force
majeure clauses and regulatory changes• Requesting and discussing with clients any necessary reschedulingor rebudgeting

Foreign exchange
volatility risk

• Impact on sales and profit / loss from sharp fluctuations in foreignexchange rates• Using project contracts denominated in multiple currencies, using
overseas procurement• Issuing orders denominated in foreign currencies, using forward
foreign exchange agreements

Risk of construction
worker shortages,
substantial wage
increases• Impact on business activities in the Total Engineering Business fromshortages of construction workers or substantial increases in wages• Monitoring and forecasting trends in the construction industry labor
force for primary plant markets• Adopting modular construction techniques to minimize on-site
construction• Working with companies that have extensive track records in local
construction

Risk of substantial
increases in fuel,material and equipmentcosts• Increased procurement and transport costs for material andequipment in the Total Engineering Business• Substantial rises in prices of raw materials or fuel in the Functional
Materials Manufacturing Business• Monitoring and forecasting price trends, ongoing efforts to improveforecast accuracy• Placing orders for materials and equipment early on• Diversifying suppliers• Transfers to product prices• Addressing this risk in contracts

Investment risk

• Loss from unforeseen circumstances in the investment environment• Inability to withdraw from investments at the preferred time or in thepreferred manner, due to low liquidity or similar factors• Clarifying the significance and purpose of new investment, andmaking decisions after deliberation by the Board or committees• Careful selection of new investments

Risk management system
Based on the Group Risk Management Committee rules, the JGC Group has established and uses a comprehensive risk
management system for a systematic understanding of the risks posed to the Group as a whole. We are committed to further
reducing these risks. Management of business risks of the Group is mainly carried out by each operating company, withsignificant individual risks reported to the holding company Board and discussed as necessary.

Risk management system
Board of Directors(four inside directors, three outside directors)

Deliberation, reporting

Oversees

JGC HoldingsGroup Risk Management Committee(Chairman: JGC Holdings Representative Director,
President, and COO)

Deliberation,
reporting

JGC Holdings
JGC CorporationJGC Japan

Representative
Director, Chairman,
and Chief Executive
Officer (CEO)

Representative
Director, President,
and Chief Operating
Officer (COO)

JGC Catalysts and Chemicals

Legal and regulatory risk • Restrictions under business laws and regulations such as tax or• Developing, implementing, monitoring, and improving complianceprograms and Group policies and rules

Information security risk

• Leaks and loss of information from power outages, disasters, failure,
loss, or theft of host computers, servers, or network equipment,
external attacks, or virus infections• Security measures such as preventing intrusion by establishing
information security policies, adopting antivirus measures, and using
encryption• Information security education, training and practice for executive
officers and employees

Risk associated withquality• Poor quality of supplies or items procured, recall of delivered
products due to defects, liability for damages• Promoting quality management system activities by establishingorganizations with jurisdiction over quality assurance• Using product liability insurance

Risk associatedwith changes in themacroeconomic
environment and social
and international affairs• Impact on business activities from fluctuating energy prices linked to
global recessions• Diversifying our business portfolio by shifting to a Group management
structure• Developing technologies to reduce environmental impact• Building value chains in collaboration with other companies thatpossess advanced technologies

Risk associated withclimate change• Natural disasters at construction and manufacturing sites• Impact on business activities from lower fossil fuel related investment
by clients, or from similar changes to client business itself• Changes in the business environment such as changes throughout
society and industry as the backdrop to climate change issues• Receiving and executing non-fossil fuel, circular economy, andrenewable energy projects• Transforming business areas, business models, and the Group’s
internal organization in line with the 2040 Vision, our long-term
management vision

construction laws, various domestic and international environmental
laws, import/export trade regulations including those for security
purposes, various laws and regulations to prevent corruption such asgraft, laws and principles on human rights protection, or business orinvestment licenses

Japan Fine Ceramics
Japan NUS

Relevant business units
Dept. with jurisdiction
over crisis management

Dept. with jurisdiction
over complianceDept. with jurisdiction
over corporate
communications

Departments

Group companies
Overseas EPC business(energy, infrastructure)75

JGC Report 2023

Domestic EPC business

Functional Materials
Manufacturing Business

OthersJGC Report 2023

76

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Reinforcing Management Resources for Continuous GrowthCompliance

Basic stance

Measures to prevent bribery

Guided by our sense of purpose and values representing our corporate philosophy, we view compliance as the cornerstone of management, based on two keywords in a list of shared values—respect and integrity. As a member ofthe international community, the JGC Group believes that compliance with the laws of Japan and overseas, as well as
fair and equitable business practices in accordance with corporate ethics, are essential to the pursuit of sustainablebusiness development. Based on this belief, the Group has developed the JGC Group Code of Business Conduct.
The code, which must be followed by all employees, contains key points to ensure that the JGC Group’s corporate
philosophy is implemented in practice.

The JGC Group follows a basic policy of complying with all anti-bribery rules and regulations, such as provisions in Japan’s
Unfair Compliance hotline Competition Prevention Law prohibiting the bribing of foreign public officials, the US Foreign Corrupt
Practices Act (FCPA), and the UK Bribery Act 2010. Group rules on preventing bribery, based on our corporate philosophy and
Code of Business Conduct, are summarized in the following table.
JGC Group Corporate Philosophy
JGC Group Code of Business Conduct

Bribery Prevention Regulations

JGC Group Compliance System Organization

Group compliance system

President

The JGC Group has established a Group compliancesystem to ensure each company carries out its businessbased on high ethical standards. Compliance executives
assigned to each main Group company work with compliance officers under their supervision to evaluate risks
faced by the company and implement suitable measures.
The JGC Group has also established the Compliance
Committee as a forum to share information and collaborate among Group companies. We are aiming to achieve asense of unity to the entire Group through the Committee.
The Compliance Unit at JGC Holdings Corporation is incharge of comprehensive measures, coordination, andother functions.

President

Compliance Executive

Regulations to prevent bribery bybusiness partners

Regulations to ensure effective operation ofbribery prevention programs

Gifts, entertainment, and travel policy

Anti-corruption policy for commercial representatives

Rules related to the JGC Group Compliance Hotline

Policy on charitable donations

Anti-corruption policy for joint ventures

Bribery risk management guidelines

Policy on political contributions

Anti-corruption policy for suppliers andsubcontractors

Bribery prevention training guidelines

Compliance ExecutiveGroup
Compliance
Executive

Compliance Unit

Regulations to prevent bribery
by employees

Dept. with jurisdiction
over compliance

Compliance monitoring guidelines

Compliance Committee
Department
Compliance Leader(Department Manager)

Department
Compliance Leader(Department Manager)

Department Compliance
Key Person

Department Compliance
Key Person

Employees

Employees

JGC Group Companies

JGC Holdings

Under these anti-corruption programs, business partners intending to do business with the JGC Group are screened toensure compliance, and the results enable us to implement any necessary risk-based measures, such as stipulating strict anticorruption clauses in contracts with business partners. Any gifts, entertainment, donations, or contributions must be approvedin advance, so that we are aware of transactions that may be linked to corruption.
Compliance is also monitored to ensure implementation of anti-bribery programs at Group companies. Each year, membersof the Compliance Unit of JGC Holdings visit several Group companies. Executives and employees are interviewed and records
audited to identify issues and make improvements.

Compliance hotline
For prompt identification and prevention of compliance risks, the JGC Group has made available several ways to seek advice
and report suspicions, mainly based on the "JGC Group Compliance Hotline" external contact point to facilitate anonymous
consultation and reporting. In addition to accepting reports from employees, we have created a convenient system that also
responds to consultations and accepts reports of violations. A system has also been developed that allows suppliers to submit
reports via our homepage.
P.85 ESG Data Highlights

JGC Group Consulting and Reporting Hotline OrganizationJGC Holdings
Auditors

Compliance
Executive

Relevant
Departments

Directs,
instructs

Consults with,
notifies

Whistleblower(business partners)

Responds,
reports toConsults with, notifies

Employees (JGC Group executives and employees, retirees,
forwarded staff, casual workers, temporary employees)

77

JGC Report 2023

Studies,
Reports instructs
correctivetoactionsover compliance

Consults with, notifies

Whistleblower(business partners)

Reports toReports to Dept. with jurisdiction(third-party organization)
Responds,
reports to

Type of training

Compliance
Executive

Directs,
instructs

Reports to

JGC Group
Compliance
HotlineAuditors

Reports toReports toReports toCompliance Unit

Responds,
reports to

PresidentGroup Compliance
Executive

Reports toStudies,
instructs
corrective
actions

Courses and participation
Fiscal 2022

Number of courses

42

Number of participants

5,053

P.85 ESG Data Highlights

Training courses in fiscal 2022

Compliance Committee

Reports toStudies,reports
corrective
actions

Awareness of compliance is enhanced through thematic and level-specific compliance training programs. Four types of level-based courses including beginner training to suit employees' positions are available for employees at group companies inJapan. Beyond compliance basics, the training features case studies and encourages
each employee to view matters of compliance as personally relevant.
Some domestic and overseas Group companies also conduct their own training
programs for anticipated risks, or covering a range of individual topics.

JGC Group Companies

President

Reports toCompliance training

Studies,reports
corrective
actions

Consults with,
notifies

Level-specific
Relevant
Departments

Thematic

CourseParticipants

New employee training

New employees of domestic Group companies

Compliance Training A

Newly appointed assistant managers of domestic Group
companies

Compliance Training B

Section managers of domestic Group companies

Compliance Training C

General managers and managers of domestic Group
companies

Compliance training for general managers

General managers at JGC Holdings, JGC Corporation,
and JGC Japan

Project compliance training

Members involved in projects

Anti-harassment training

JGC Japan employees at domestic sites or regional offices

Risk-specific compliance training (anti-corruption,
subcontracting and anti-monopoly laws, and other risks)Group employees in Japan (applies only to specificdepartments and positions)JGC Group Code of Business Conduct e-Learning

Executive officers and employees at JGC Holdings,
JGC Corporation, and JGC JapanJGC Report 2023

78

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Reinforcing Management Resources for Continuous Growth

Stakeholder Engagement

Employees Instilling the vision and management policy, frank dialogue

Basic stance

Dialogue with top management, quarterly newsletter, and more

Attentive communication reflects our belief that engagement with our diverse stakeholders is essential to sustainablegrowth and higher corporate value. By providing regular feedback from shareholders and investors to management
and relevant departments, applying this knowledge in management strategies, and diligently disclosing both financial
and non-financial information, we create a forum for an understanding of our management policies.

The JGC Group holds executive-employee roundtable discussions so that people speak freely and share in our vision. This isrecorded and broadcasting on demand encourages a vibrant corporate culture. Efforts are made to share knowledge of management policies and issues with employees across the Company through a variety of media such as newsletters and Company-widebulletin boards, part of communication that fosters a sense of belonging among employees.

Next-generation of human resources

Shareholders & Investors

Fostering interest in sciences and global issues

Disseminating management information andproviding feedback to management

Company visits from public high schools in Yokohama City
The JGC Group hosts company visits by students from public high schools in Yokohama city. Here, talks with employees
and students, and VR experiences etc., encourage communication. In fiscal 2022, the program also raised awarenessof our efforts toward sustainability, as students learned about JGC sustainable aviation fuel (SAF) initiatives.

 nhancements to the JGC Report
E(Integrated Report)

Chemistry workshops for elementary students

More informative each year, the JGC Report serves a key role in disclosure for long-term
investment decisions. The content of the 2022 JGC Report reflects the broad rangeof preliminary feedback received from shareholders and investors. There is a growing
level of interest from the stock market on how the 2040 Vision and BSP 2025 will beachieved, so the report outlines how the JGC Group's strengths have been honed andleveraged as strategies for the Group's expansion and growth since its founding. This
expanded coverage of non-financial information, including our response to climatechange and human rights in the supply chain, was recognized by domestic equity
investment managers of the Government Pension Investment Fund (GPIF) with a MostImproved Integrated Report award in 2022.

IR activities schedule
3rd quarter
Resultsannouncement
Conferencecall

2nd quarter
Results announcement
Results briefing
December January

Overseas IR November
October

1st quarter
September
Resultsannouncement August
Conference callFebruary

AnnualSchedule

July

June

Full-year
Results
ResultsAprilannouncement
May
Results briefing
March

Main IR activities
Activity

No. ofeventsNo. ofcompanies

Responses to requests for information, phone callsfrom institutional investors in Japan / overseas

216

114

2

68

Results briefing by top managements

270

ESG-related meetings

11

11

Overseas IR roadshows by top managements*

00

Business activities briefing conference––

Results briefing conference calls

Ordinary General Shareholders’ Meetings
Date held
Shareholders attending
Ratio of voting rights
exercised

FY2022

JGC
Group

Local
communities

FY2023June 29 (Tue) June 29 (Wed)June 29 (Thu)

19*

32*

48

84.21%

87.11%

84.65%* Fiscal 2021 and 2022, we asked shareholders to avoid attending themeeting at the venue as much as possible, as part of measures to preventthe spread of COVID-19.

Nextgenerationof human
resources

Stakeholders

Clients* Suspended during fiscal 2022 due to the pandemic.

FY2021

Ordinary generalshareholders’meeting

Employees

Shareholders& investors

Positive IR activities

Each year at its Kitakyushu office, JGC C&C has held workshops with chemistry
experiments for local elementary students. This represents a meaningful way tointeract with and contribute to the community. JGC C&C will continue to kindle aninterest in chemistry through these opportunities, which also encourage people toknow about their business activities. We will continue to build positive engagementwith the local community.

An experiment at a chemistry workshop

Local communities
Long-term commitment consistent with the needs of countries constructing plants

Initiatives for Basra elementary students
Academic decline in postwar Iraq has been significant, and educational investment is insufficient, particularly in Basra Province. Unemployment also remains high among young people,
with jobs scarce even for university graduates. The JGC Group launched JGC Code Educationin March 2022, to teach computational thinking at local elementary schools in Basra with theaim of long-term contributions, such as providing educational experiences for children andcreating youth employment opportunities. Nearly 20,000 students will have opportunities tolearn programming concepts over the next two years. Additionally, science shows held on June
2022 targeted some 2,600 students at about 20 public elementary schools in Basra Province.

JGC Code Education classroom

Vendors

Vendors
Clients Sharing know-how and training human resources
HR training programs in resource-rich countries
Over the past few decades, the JGC Group has held training programs for engineers and students of chemical engineering andsimilar disciplines in efforts to strengthen ties with resource-rich countries. Many past participants have later contributed to domestic resource development and industrial growth, and also expanded the JGC Group's business in resource-rich countries.

Sharing project know-how, collecting local information and enhancing safety and quality standards

Supporting vendors with technical assistance
The JGC Group actively promotes domestic procurement where plants are built, and when
sophisticated equipment is ordered, our engineers may go on-site to provide technical assistance tailored to local vendors’ expertise and facilities. Viewing these close ties as an asset, we
take the initiative in providing technical assistance to vendors.
Training for welders

79

JGC Report 2023

JGC Report 2023

80

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Results ofValue Creation
The JGC Group’s value-creation mechanism creates economic, social, and environmental value while supporting
our sustainable growth, with outcomes gauged and evaluated through financial and non-financial metrics. Here, we
present business results for fiscal 2022 and chronicle thisvalue creation.

81

Financial Highlights

83

ESG Data Highlights

85

Consolidated Segment Information

86

Operational Review: Total Engineering Business

87

Operational Review: Functional Materials
Manufacturing Business

90

Analysis of Performance and Financial Position

91

Consolidated Financial Statements

95

Group Companies

102

Stock Information

103

Outline of JGC

104

JGC Report 2023

JGC Report 2023

82

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Results of Value Creation

Financial Highlights
JGC Holdings Corporation and its consolidated subsidiaries*1(Millions of yen)

Years ended March 31

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

  Net Sales

675,821799,076879,954

693,152

722,987

619,241

480,809433,970

428,401

606,890   Operating Profit (Loss)

68,25329,74049,661(21,496)

21,49523,24920,23422,88020,68836,699  Profit (Loss) Attributable to
Owners of the Parent*2

47,178

20,62842,793(22,057)

16,58924,005

4,117

5,141

(35,551)

30,665  New Contracts*3

818,161

769,680

320,626

506,293547,826

935,451

189,643

683,068

315,956

878,789

1,767,814

1,772,036

1,192,625

1,045,684

846,157

1,208,365

941,618

1,241,204

1,215,911

1,571,093   Total Current Assets

575,886

533,538

522,747

480,865

521,320541,747

537,955

548,359

533,343

539,493   Total Current Liabilities

333,353

286,533

225,203

226,457

215,773

223,559

228,386

197,055

253,836

272,206  Working Capital

242,533

247,005

297,544

254,408

317,200

318,188309,569

351,304

279,507267,287   Net Property, Plant and Equipment

70,29078,56076,25569,87755,22255,44049,794

66,65469,534

72,234  Total Assets

746,102719,754689,782646,291

684,921708,855

671,273702,529694,274

713,127   Long-Term Loans Payable

13,001

22,71520,991

12,631

4,294

3,949

347

16,783

11,496

13,891  Net Assets

379,882

388,496

419,673

383,260

395,779

410,350

390,979

417,616

387,662

397,981  Shareholders’ Equity

374,654

387,480

418,695

382,215394,701

409,254

390,516

417,120

387,145397,343   Cash Flows from Operating Activities

120,576(71,416)(49,764)(28,884)

5,539(55,259)

92,442

12,467

19,311

110,769   Cash Flows from Investing Activities(18,728)(23,411)

8,696(12,979)

11,736(4,662)

19,364(13,520)(7,695)(11,471)   Cash Flows from Financing Activities(10,687)

3,836(4,374)(19,674)

33,781(13,878)(7,699)

196

(148)

(61,288)   Cash and Cash Equivalents at End of Year385,252

297,707247,947

185,603

235,394

160,841

261,898

268,281

288,009332,755   Return on Assets (ROA) (%)

12.2

6.1

7.4

(2.3)

3.8

4.6

3.2

3.7

4.3

7.2

   Return on Equity (ROE) (%)

13.3

5.4

10.6

(5.5)

4.3

6.0

1.0

1.3

(8.8)

7.8

   Net Income (Loss) per Share (yen)186.9081.73

169.60(87.42)

65.75

95.14

16.32

20.37

(140.77)

122.28   Cash Dividends per Share (yen)

46.5

21.0

42.5

30.0

25.0

28.5

12.0

12.0

15.0

38.0

   Gross Profit Ratio (%)

13.1

6.6

8.3

0.2

6.2

7.3

9.0

10.1

10.6

11.0

   Operating Income Ratio (%)

10.1

3.7

5.6

(3.1)

3.0

3.7

4.2

5.3

4.8

6.0

   Equity Ratio (%)

50.2

53.8

60.7

59.1

57.6

57.7

58.2

59.4

55.8

55.7

   Current Ratio (%)

172.8

186.2

232.1

212.3

241.6

242.3

235.5

278.2

210.1

198.2

   Payout Ratio (%)

24.9

25.7

25.1

—

38.0

30.0

73.5

58.9

—

31.1

   Number of Employees

7,005

7,332

7,489

7,554

7,610

7,841

7,607

7,371

7,275

7,876

Performance Highlights  Outstanding Contracts

Financial Position at Year-End

Cash Flows

Financial Highlights*4*1 As of March 31, 2023, there were 25 consolidated subsidiaries.
*2 As a consequence of applying “Accounting Standard for Business Combinations” (ASBJ Statement No. 21, September 13, 2013), “Net income (loss)” is referred to as“Net income (loss) attributable to owners of the parent” from fiscal 2015 onward.
*3 The method of aggregating orders received has been changed to include orders in Functional Materials Manufacturing Business since fiscal 2022.
*4 The “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) has been applied from the beginning of fiscal 2021.

83

JGC Report 2023

JGC Report 2023

84

Management Messages

JGC Group's Growth Strategy

Results of Value Creation

Results of Value Creation

ESG Data Highlights

Consolidated Segment Information
JGC’s Main KPIs

Units

Fiscal 2018

Fiscal 2019

Fiscal 2020*1

Fiscal 2021*1

Fiscal 2022*1
Functional Materials
Manufacturing Business

E Report on Environmental Initiatives
Environment-related Initiatives• Contribution to environmental
protection• Environmental improvement
activities in line with ourbusiness• Promotion of the zero
emissions initiative

Scope 1 and 2 GHG emissions*2

t

—

—

132,546

133,573

134,004

Scope 3 GHG emissions*2

t

—

—

—

702,873975,775

Industrial waste recycling rate (Domestic construction sites)

%

96.1

85.2

88.3

98.4

99.0

Functional Materials
Manufacturing Business

Other

7.9%

1.2%

¥47.7 billion

Incidents

0

0

0

0

0

Energy-related CO2 emissions (Domestic construction sites)

kg CO2/hour

2.39

0.61

0.40

1.91

1.35

Net Sales

%

79.5

69.5

85.9

93.9

99.6

Fiscal 2022

Energy consumption (Yokohama Head Office)*3

Crude oilequivalent (kl)

2,224

2,139

2,091

2,022

2,035

Yokohama Head Office power consumption

1,000 kWh

5,497

5,221

4,756

4,658

4,819

Consumption of chilled water by Yokohama Head Office1,000 MJ

15,353

15,503

14,34913,327

14,970Consumption of steam by Yokohama Head Office1,000 MJ

7,724

7,170

10,377

9,963

7,708

Volume of waste disposed by Yokohama Head Office1,000 kg

206

191

109

129

149

Rate of recycling of waste by Yokohama Head Office

%

61.4

59.5

65.5

68.6

61.4

Persons

21

26

30

35

39

%

—

2.2

2.5

2.8

3.1

Other

16.9%

¥7.5 billion

Number of incidents of leaks of hazardous substances, etc.
(Domestic and overseas construction sites)
Rate of diffusion of electronic manifests

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

4.2%¥7.1 billion¥1.7 billion

Operating
IncomeFiscal 2022

Total
Engineering Business

Total
Engineering Business¥551.6 billion¥33.4 billion

78.9%

90.9%

S Report on Social Initiatives
Initiatives related to humanrights and labor practices• Promotion of diversity• Support for realization ofwork–life balance• Support for employee careerformation

Number of women in management positions
Ratio of women in managerial positions
Rate of employment of people with disabilities*4

%

1.87

1.97

2.27

1.72

2.58

Number of re-employed employees*5

Persons

109

55

55

13

8

Number of non-Japanese employees*5

Persons

89

86

95

93

90

%

10

14

48

32

69
33 (100)

Rate of employees taking childcare leave (Male)
Number of female employees taking childcare leave (Rate ofreinstatement of female employees taking childcare leave)

Persons (%)

24 (100)

19 (100)

27 (100)

27 (100)

Number of employees taking spousal childbirth leave

Persons

64

80

91

87

61

Number of employees taking sick or injured childcare leave

Persons

185

187

217

167

189

Number of employees taking nursing care leave

Persons

22

11

42

33

38

Number of employees taking temporary retirement for nursing care

Persons

0

0

1

0

3

Number of employees working reduced hours for childcare

Persons

51

47

47

44

68

Number of employees working reduced hours for nursing care

Persons

0

0

0

0

0

%

53

59

60.75

60.95

70.25

Persons

86

45

55

88

102

Total annual training

Hours

–

–

–

57,87750,871

Training per person

Hours

–

–

–

18

17

Persons

2

4

4

1

1

Total project working hours

1,000 hours

90,99356,47840,86149,334

46,401

Number of fatal accidents

Incidents

0

0

1

0

0

Number of accidents accompanied by lost work time

Incidents

8

7

7

8

8

Number of restrictions on work

Incidents

11

18

15

11

13

Number of conditions requiring specialized treatment

Incidents

Rate of utilization of annual leave
Number of employees dispatched for on-site training /on-site instruction

Number of employees dispatched to overseas companies, etc.
Initiatives related to health and safety*6• Fostering of culture of health and safety• HSSE leadership by top management• Enhancement of HSSE management
system for investment projects• Ongoing implementation of traffic safetymeasures• Further development of in-house healthand safety education• Enhancement of Head Officeconstruction HSSE functions

31

46

46

31

32

Rate of frequency of accidents accompanied by lost work time*7

0.018

0.025

0.034

0.032

0.034

Rate of frequency of recordable accidents

0.11

0.25

0.34

0.20

0.23

Times
(People)6 (199)21 (559)

19 (1,856)

27 (846)42 (5,053)

Incidents

28

47

44

49

48

*8

Total Engineering Business
Focused on Total Engineering Business activities including design, procurement, construction, and commissioning offacilities and plants used for petroleum and petroleum refining, petrochemicals, gas, LNG, chemicals, nuclear energy,
metal refining, biochemicals, food, pharmaceuticals, healthcare, logistics, information technology, environmental protection, and pollution control.

Functional Materials Manufacturing Business
Focused on manufacturing and sales of products in the fields of catalysts, nanoparticle technology, hygiene andsafety, electronic materials, high-performance ceramics, and next-generation energy.

Other Businesses
Includes consulting, office support, desalination, and oil and gas production and sales.

Completed Construction by Region

Millions of yen

JapanSoutheast Asia

Middle East

AfricaNorth America

Other

Total

173,106

53,791

148,463

32,009184,986

14,532606,890(Note) B ased on client location and classified by country or region.

G Report on GovernanceInitiatives related to fair business practices•R ealization of increased complianceawareness

Number of times compliance training implemented /Number of employees receiving compliance training*9

Number of reports received by hotlines
Initiatives related to the promotion of
information security• Information management awarenessverification surveys and voluntary
inspections• Drills against targeted threats

Number of serious information security-related incidents

Incidents

0

1*10

0

0

0

Reinforcement of governance system

Number of outside directors

Persons

2

3

4

4

3

*1 Applies to JGC Holdings, JGC, and JGC Japan combined.
*2 Based on CDP reporting. Also includes JGC C&C, Japan Fine Ceramics, and Japan NUS.
*3 Energy consumption (Yokohama Head Office): Reduction target set so that an average annual reduction of 1% over the past five years can be achieved.
*4 From fiscal 2022, scope includes special subsidiary JGC Parallel Technologies Corporation.
*5 Number of re-employed employees and number of non-Japanese employees = (Number of employees in April + Number of employees in March) ÷ 2*6 This data is the total based on the period from January to December.
*7 Rate of frequency of accidents accompanied by lost work time = (Number of accidents accompanied by lost work time) × 200,000 ÷ Total project working hours*8 Rate of frequency of recordable accidents = (Number of fatal accidents + Number of accidents accompanied by lost work time + Number of restrictions on work + Number ofconditions requiring specialized treatment) × 200,000 ÷ Total project working hours*9 From fiscal 2022, includes e-Learning.
*10 Number of serious information security-related incidents: 1 (Emails sent to external parties due to unauthorized access)Corrective measures for the above incident: introduction of measures to prevent unauthorized access through two-factor authentication

85

JGC Report 2023

JGC Report 2023

86

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Results of Value Creation

Operational Review

Total Engineering Business

Overseas Sector

Farhan Mujib
Representative Director,
President
JGC Corporation¥696 billion
New Contracts Targeted for Fiscal 2023 ¥620 billion

New Contracts in Fiscal 2022 Approx.

Facility Solutions

Energy Solutions
Business Areas

Business Areas ngineering, procurement and construction of plants inEsectors such as liquefied natural gas (LNG), Carbon Captureand Storage (CCS), petroleum refining, petrochemicals,
chemicals, gas processing, etc.

Semiconductor manufacturing facilities (image)
FLNG plant (Africa)

Operational Review

Economic activity resumed around the world during fiscal
2022 as the impact of COVID-19 gradually slowed down.
There was also an increase demand for natural gas including LNG as a transition energy, given both concerns overenergy security caused by conditions in Ukraine and moves
toward low-carbon and decarbonization. With the numberof projects increasing as clients resume their capital investments, we received orders for Zuluf AH Oil Increment Central
Processing Facilities in Saudi Arabia, a near-shore FLNG
plant in Malaysia, and a Vinyl Chloride Monomer (VCM),
Polyvinyl Chloride (PVC) and OSBL expansion project in ngineering, procurement and construction of infrastructureE
facilities in the semiconductor and battery-related industries,
data centers, LNG receiving terminals, transportation
infrastructure, etc.

Thailand.
During fiscal 2023, clients are slated to continue moving
forward with their capital investment plants with a focus on
natural gas and LNG, the importance of which has beenreconfirmed as a transitional energy—a stable energy
source in the shift to a low-carbon and decarbonization. We
will continue to evaluate the risks and concentrate on selecting projects that are definitely forecast to deliver profits. At
the same time, we will also be focusing on increasing future
capacity, including the operation center that we establishedin India.

Operational Review

Orders received in fiscal 2021 progressed at a steady paceduring fiscal 2022, as we also conducted sales activities inearnest with the goal of developing clients and coordinating and secure projects through a solutions-driven approachstarting with conceptual design.
With the expansion of digital industries, we will be aiming
to receive EPC projects in industrial infrastructure sectors
such as the high-demand semiconductor and battery-relatedindustries, data centers. We will continue working with client's decision-making processes to develop clients througha solutions-driven approach starting with conceptual designand coordinate and receive projects. Plans for low-carbon
and decarbonization-related projects are taking shapethroughout Southeast Asia, so we will be coordinating efforts
with companies including JGC Asia Pacific to develop theminto EPC orders.

Current Major EPC Projects

Sustainable Solutions
Business Areas

Engineering, procurement and construction of plants in

Iraq

sectors such as hydrogen/fuel ammonia, SAF, and nuclear
energy, etc.

Refinery Upgrading Project

Operational Review

We established the "Sustainable Solutions" organization in
September 2022 to serve the sustainability sector outsideof Japan toward achieving a low-carbon and decarbonizedsociety. The organization covers sustainability-oriented projects overseas in areas such as hydrogen/fuel ammonia, SAF,
green chemicals, and SMRs while securing and executing
projects for related facilities from FS to FEED, and EPC.

87

JGC Report 2023

CanadaLNG Project

ThailandAmmonia synthesis pilot project facility (Fukushima)

With the global trend toward low-carbon and decarbonization, capital investment plans are anticipated to moveahead during fiscal 2023, particularly in sectors, such ashydrogen/fuel ammonia and SAF. The Company will takepart in FS and FEED, identify the most feasible projects thatcan create a sense of differentiation, and develop them into
EPC orders, all while factoring in partnering and conditions
like countries and regions with a proven track record.

Saudi Arabia
Zuluf AH Oil Increment
Central Processing Project

VCM, PVC, and OSBL
Expansion Project

Malaysia

USA

Floating LNG Project

Ethylene Project

Australia
Hydrogen Projectetc.

JGC Report 2023

88

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Results of Value Creation

Operational Review

Total Engineering Business

Functional Materials Manufacturing BusinessShoji Yamada

Domestic Sector

Representative Director,
President
JGC Japan Corporation¥128 billion
New Contracts Targeted for Fiscal 2023 ¥180 billion

Catalysts and Fine
Chemicals Sector

Toshiharu Hirai
Representative Director,
President
JGC Catalysis and Chemicals Ltd.

New Contracts in Fiscal 2022 Approx.

Business Areas ngineering, procurement, and construction of plants andE
facilities in sectors such as pharmaceuticals, healthcare, SAF,
hydrogen/fuel ammonia, chemical recycling, petroleum refining,
petrochemicals, chemical, nuclear energy, etc.

Pharmaceutical production plant (Shizuoka)

Japan, such as participating in the technology development
and demonstration project for CO2 separation and capture
with unused LNG cold energy as put forward by companies,
such as Toho Gas Co., Ltd.
There has been ongoing investments in facilities centeredon maintenance of existing refineries, life sciences andhealthcare and chemicals, as well as anticipated growth
in clients capital investments in the low-carbon and decarbonization-related sector, such as hydrogen/fuel ammonia
and SAF, CCS and battery facilities toward achieving Green
Transformation (GX) set forth by the Japanese government,
and the circular economy sector.

In catalysts in fiscal 2022, domestic and overseas demandfor catalysts remained steady, primarily with FCC catalysts
as fuel demand gradually returned. In the Fine Chemicals
sector, despite a worsening business environment in thesemiconductor and electronics market leading to a decreasein demand for silica sols used in hard disk and semiconductor polishing and for silica sols used as anti-reflective material in flat panel displays and tablets, demand for cosmetics
materials remained steady.
Turning to the Functional Materials Manufacturing
Business in fiscal 2023, in catalysts, we will again seek alarger domestic market share for FCC catalysts and continue
developing overseas operations, maintain our partnerships

Fine Ceramics Sector
Business Areas

NiigataMiyagiGround facility for blue hydrogen and ammonia production
pilot project facilityBunum, que pec morterit; hosuludam

and improve profitability for hydrotreating catalysts, work
to secure new chemical catalyst contracts, develop new
chemical catalyst products for the growing carbon recycling
and chemical recycling sectors, and develop materials forenvironmental conservation catalysts for renewable energy
power generation. In fine chemicals, despite concerns overa worsening business environment in our core electronics
and semiconductor markets, we are focusing on launching
new silica sol polishing materials, expanding functional coating material sales and applications, developing cosmetic
microbead alternatives, and expanding optical material sales
and applications.

Representative Director,
President,
Japan Fine Ceramics Co., Ltd evelopment and production of ceramic materials forDsemiconductor, automotive, telecommunications, industrial,
medical, and aerospace applications

Biomass power generation facility

Fukushima

ToyamaGreen ammonia demonstration plant

Vaccine production plantTochigi

Shiga

Bio API manufacturing facility

Pharmaceutical plant

Chiba
Land-based aquaculture plant

Aichi
Biomass power generation facility

Shizuoka
API manufacturing facility

Hyogo
Biomanufacturing-related facility

JGC Report 2023

Oil refining catalysts

Hiroshi Tanaka

Current Major EPC Projects

89 evelopment and production of catalysts used in petroleumD
refining, chemical, and environmental conservation and of finechemical products used as materials in semiconductor,
IT / electronics, optics, cosmetics, and other applications

Operational Review

Operational Review

Fiscal 2022 saw activity in renovation and maintenance forexisting oil refineries as well as ongoing capital investment inlife sciences, healthcare and chemicals facilities. In this kindof environment, in addition to maintenance of existing refineries and chemical plants, the domestic business secured
construction contracts for pharmaceutical manufacturing
facilities and hospitals, a SAF production facility construction
project in Osaka, construction work for a ground facility forblue hydrogen and ammonia production pilot project facility in Niigata Prefecture, and facilities associated with theresumption of nuclear power plants. We also made progresswith low-carbon and decarbonization-related projects in

Business Areas

Operational Review

The semiconductor-related market began to suffer in thesecond half of fiscal 2022 due to slowing demand for
products used in semiconductor manufacturing, as device
manufacturers adjusted production activities and curtailed
new capital investments. Meanwhile, demand for highthermal conductivity silicon nitride substrates for electricvehicle and hybrid vehicle power semiconductors continued
to remain strong, and so the decision was made in June
and July 2022 to acquire land and for capital investment
to increase production of high thermal conductivity silicon

Announcing the location of the new plant

nitride substrates and other materials. To expand businessin the Fine Ceramics sector, operations commenced at JFC
Materials Co. Ltd., on July 1, 2022 following acquisition of
the ceramics business from Showa Denko Materials Co.,Ltd.
Despite ongoing concerns over a worsening businessenvironment in the semiconductor manufacturing equipment
market in fiscal 2023, we will continue working to acquire
new clients and enter new areas, and seek more orders forhigh thermal conductivity silicon nitride substrates.

JGC Report 2023

90

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Results of Value Creation

Analysis of Performance and Financial Position
Overview of the business environment
Despite a trend toward global economic recovery as theimpact of COVID-19 eases, increasing prices over the longer
term due to factors, such as the prices of resources causedby conditions in Ukraine, as well as countries' central banks
continuing to tighten monetary control in order to curb theseincreases. This is leading to signs of recession throughout
the global economy, and there is growing uncertainty about
the future.
With these circumstances affecting the overseas markets
served by the JGC Group’s Total Engineering Business,
the Energy Solutions sector (including oil refining, petrochemicals and chemicals, gas processing, liquefied naturalgas (LNG)) saw recovery in demand for energy following
the resumption of economic activities around the world.
Moreover, from the standpoint of both energy security andthe shift to a low-carbon society, the importance of relatively
low-impact natural gas (including LNG) is growing, which
has led to steady growth in numerous capital investment
projects in oil- and gas-producing countries. In the Facility
Infrastructure Solutions sector (including power generation,
receiving terminals, pharmaceuticals, medical care, water
treatment, and railways), there was progress in renewable
power generation and investment related to industrial infrastructure mainly throughout Asia in light of the global trend
toward low-carbon and decarbonization. In the Sustainable
Solutions sector (including hydrogen/fuel ammonia, small
modular reactors (SMRs), specialty chemicals, chemical
recycling, and green chemicals), there was steady development mainly with low-carbon and decarbonization-related
projects such as hydrogen/fuel ammonia, following similar
global trends toward low-carbon and decarbonization.
The domestic market for this business saw activity in
refinery renovation and maintenance, and there has beenongoing capital investment in infrastructure focused on life
sciences, healthcare, and chemicals, as well as progresswith low-carbon and decarbonization-related projects suchas hydrogen/fuel ammonia and SAF (sustainable aviationfuel) toward achieving Green Transformation (GX) set forth
by the Japanese government.
In the Functional Materials Manufacturing Business, theCatalysts and Fine Chemicals sector suffered from a worsening business environment for fine chemicals in the semiconductor and electronics market, due to excess supply
and a slowdown in consumer spending following rising
global inflation, despite solid demand for customer products
centered mainly on catalysts in line with the resumption of
economic activities worldwide with the easing of COVID-19.
In the Fine Ceramics sector, there was a greater economic
slowdown in the previously strong semiconductor-related
market, but demand for power semiconductor-related products for electric vehicles and hybrid vehicles continued toremain positive.
The JGC Group continued to monitor the ever-changing
business environment, gathering information and taking
steps against risk as needed, as we sought to prevent the
spread of COVID-19 infection and remain cognizant of thesafety of employees and other stakeholders as we conducted business.

Results of operations

As a result, the equity ratio was 55.7% compared with
55.8% at the end of the previous fiscal year.

In the current consolidated fiscal year, the JGC Group
reported net sales of ¥606,890 million (up 41.7% year onyear), operating income of ¥36,699 million (up 77.4% year
on year), ordinary profit of ¥50,560 million (up 68.4% year onyear), and net profit attributable to owners of the parent of¥30,665 million (net loss attributable to owners of the parentof ¥35,551 million last fiscal year).

AssetsTotal current assets at the end of the current consolidated
fiscal year were ¥539,493 million, an increase of ¥6,149 million compared to the end of the previous fiscal year. Thiswas mainly due to a decrease of ¥38,712 million in accounts
receivable, and an increase of ¥44,792 million in cash anddeposits. Fixed assets totaled ¥173,633 million, an increaseof ¥12,702 million from the end of the previous fiscal year.
This was mainly due to an increase of ¥2,700 million in property, plant and equipment, an increase of ¥1,349 million in
intangible assets, and an increase of ¥8,653 million in investments and other assets.
As a result, total assets amounted to ¥713,127 million,
an increase of ¥18,852 million compared to the end of theprevious fiscal year.

Liabilities
Total current liabilities at the end of the current consolidated
fiscal year were ¥272,206 million, an increase of ¥18,369
million compared to the end of the previous fiscal year. Thiswas mainly due to a decrease of ¥20,000 million in current portion of bonds payable, but an increase of ¥26,747
million in notes and accounts payable and an increase of¥9,794 million in current liabilities and others. Total long-term
liabilities amounted to ¥42,939 million, a decrease of ¥9,836
million compared to the end of the previous fiscal year. Thiswas mainly due to a decrease of ¥10,000 million in bonds
payable.
As a result, total liabilities amounted to ¥315,145 million,
an increase of ¥8,533 million from the end of the previous
fiscal year.

Net assets
Total net assets at the end of the current consolidated fiscal
year were ¥397,981 million, an increase of ¥10,318 million
compared to the end of the previous fiscal year. This was
mainly due to the recording of ¥30,665 million in net profit
attributable to owners of the parent, despite a decrease of¥20,000 million due to the purchase of treasury shares.
Equity and equity ratio(Billions of yen)

(%)
65

500
400
300

394.7

409.2

390.5

417.1
387.1

397.3

59.4
57.6

57.7

55.8

200

55.7

2017

2018

■■ Equity (left scale)91

JGC Report 2023

In fiscal 2022, the JGC Group sought total orders of ¥840
billion in the Energy Solutions Business, Facility Infrastructure
Solutions Business and Sustainable Solutions Business,made up of ¥670 billion in the overseas business and ¥170
billion in the domestic business. With the number of projects
increasing as clients resume their capital investments, we
worked toward securing the number of target orders, while
concentrating on selecting projects that are definitely forecast
to deliver profits, and as a result of these efforts, we achieved
new consolidated contracts of ¥824 billion, close to thenumerical target and our second-highest level ever recorded.
In the Energy Solutions Business in the current consolidated fiscal year, the orders we received included a construction project for a large gas and oil separation plant for Saudi
Aramco, a construction project for a near-shore floating LNG(FLNG) plant for Petroliam Nasional Berhad (PETRONAS)
in Malaysia, and a VCM (vinyl chloride monomer) and PVC(polyvinyl chloride) production capacity expansion project inThailand. Other orders included Front End Engineering Design(FEED) for expansion project of the Cameron LNG plant in
the U.S., an FLNG plant in Nigeria and LNG plant in Papua
New Guinea. Furthermore, JGC Corporation took part in ajoint carbon capture and storage (CSS) study in Malaysia run
by Petronas PETRONAS and Japan Petroleum Exploration
Co., Ltd., and also played an active role toward low-carbon
and decarbonization of fossil fuels, such as taking part ina joint study run by PETRONAS and JX Nippon Oil & Gas
Exploration Corporation for developing the specifics of a
CSS supply chain covering CO2 emitted by various industrial
facilities within Malaysia as well as the separation and capture,transportation, compression and storage of CO2 from Japanand other countries outside of Malaysia. Furthermore, being
the first Japanese company taking part in the "Aiming for Zero
Methane Emissions Initiative," run by an international organization leading the oil and natural gas industry's response to
climate change with the aim of reducing methane emissions
from the oil and natural gas sector.
Orders received in the previous consolidated fiscal year
progressed at a steady pace in the Facility Infrastructure
Solutions sector, as we also conducted sales activities inearnest with the goal of developing clients and coordinating
and securing projects through a solutions-driven approachstarting with conceptual design.
In the Sustainable Solutions Business that was establishedby JGC Corporation in September 2022 as an organization
serving low-carbon and decarbonization projects overseas,
we secured orders for pre-FEED services for the circular
economy, and conducted sales activities in earnest toward

Current consolidated accounting year

56

Total Engineering
Business(Millions of yen)

53

100
0

Total Engineering Business

62
59

58.2

Segment information

2019

2020

2021

2022

FEED and EPC (Engineering, Procurement, Construction)
services for numerous hydrogen-related projects that were
expected to move ahead.
Overseas subsidiaries secured orders, including a largescale solar power generation installation project by the
Vietnam subsidiary, gas processing plant construction project by the Indonesian subsidiary, numerous chemical plant
construction projects by the Singaporean subsidiary, andlarge-scale ethylene production plant construction projectby the U.S. subsidiary.
With the overseas plant market slated to expand overthe medium to long term in line with increasing demand forenergy, we established a new operation center in Chennai
City in India, which began operating in November 2022 inorder to expand the execution capacity of our Group's overseas plant construction projects. Efforts are already being
made to quickly develop a framework comprising 250 engineers, with plans in place to expand up to 1,000 engineers
in the future.
In addition to maintenance of existing refineries and chemical plants, the domestic business secured construction contracts for numerous pharmaceutical manufacturing facilities
and several hospitals, a SAF production facility construction
project in Osaka, and construction work for a ground facility for blue hydrogen and ammonia production pilot project
facility in Niigata Prefecture. We also made significant progress in low-carbon and decarbonization-related projects inJapan, such as participating in the technology development
and demonstration project*1 for CO2 separation and capture
with unused LNG cold energy as put forward by Toho Gas
Co., Ltd, etc.
Our new company "Brownreverse Inc." released the 3D
viewer "INTEGNANCE® VR" for advanced support of maintenance for existing facilities using digital twins, while JGC
Corporation began offering the "CoreSafety®" risk management software to assist with optimizing smart maintenance.
The JGC Group has also focused efforts on diversifying its
business models, including beginning the "Development of
Polymer Synthesis Technology by Microorganisms using CO2
as Direct Raw Material*2" together with Kaneka Corporation,
Bacchus Bio Innovation Co., Ltd. and Shimadzu Corporation,
and as part of this initiative, developing and demonstratingthe "Integrated Biofoundry®" with Bacchus Bio Innovation
Co., Ltd. as a one-stop service for breeding microbes that
produce a variety of useful substances from CO2, scaling up
this technology, and developing production processes.
In addition to the "Perovskite solar cell" next-generation
solar cell developed through the corporate venture capitalfund "JGC MIRAI Innovation Fund" established in the previous consolidated fiscal year, investments were also made into
pharmaceutical and medical-related start-ups, AI-powered
wearable devices, and various start-ups for the production ofplant-derived plastic substitute materials.
As part initiatives toward the "establishment of futureengines of growth" put forward as a key strategy of

(FY)

0

Net sales
Operating profit

Year-on-year
Change (%)

Functional Materials
Manufacturing Business(Millions of yen)

Year-on-year
Change (%)

Other Businesses(Millions of yen)

Year-on-year
Change (%)

551,60745.9

47,773

8.0

7,509

21.4

33,429

95.5

7,169

(1.7)

1,786

72.2

Equity ratio (right scale)

JGC Report 2023

92

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Results of Value Creation

Analysis of Performance and Financial Position

our current medium-term business plan "Building a
Sustainable Planetary Infrastructure 2025 (BSP 2025),"
we forged an alliance with Toyo Engineering Corporation
for contracting and executing FS (feasibility study), FEEDand EPC projects for fuel ammonia production plants
and ammonia receiving terminals. We also concluded
a license agreement with U.S.-based KBR Inc. for anammonia production process, with the JGC Group, ToyoEngineering Corporation and KBR Inc. coordinating sales
activities toward securing potential contracts in North
America, the Middle East, North Africa and other regions.
We also concluded a license agreement with ToyoEngineering Corporation in March this year for contracting
and executing FEED and EPC projects for SAF production
plants in Japan, and will coordinate joint sales activities andexecution of projects for SAF production plant construction
projects that are expected to increase in Japan going forward, with the view to securing more projects.
We also partnered with Cosmo Oil Co., Ltd. and Revo
International Inc. to establish the merger company SAFFAIRE
SKY ENERGY LLC for a domestic SAF production andsupply project*3 based on used cooking oil, with the aimof commencing operation from between the second half offiscal 2024 to the start of fiscal 2025. For the production andtechnological demonstration project*4 for green ammonia
derived from renewable energy, we concluded a basic cooperation agreement with Namie Town in Fukushima Prefecture
for the site of a demonstration plant anticipated to commence operation in fiscal 2024. Furthermore, we partneredwith Iwatani Corporation and Toyota Tsusho Corporation to
begin a study on developing a low-carbon hydrogen production model using a waste plastic gasification facility in thesuburbs around the Port of Nagoya in Aichi Prefecture, and
we also worked with Teijin Limited and ITOCHU Corporation
to establish the joint venture company RePEaT Co., Ltd. tolicense technology for the chemical recycling of polyester
products, as part of efforts to advance recycling business
operations of polyester products by concluding the firstlicense agreement with Chinese corporations.
*1 Subcontracting initiatives for the NEDO Green Innovation Fund project: Technology
development and demonstration project for CO2 separation and capture*2 Selected as NEDO Green Innovation Fund project: Promotion of Carbon Recycling
Using CO2 from Biomanufacturing Technology as a Direct Raw Material*3 S elected as a NEDO Development of Production Technologies for Biojet Fuels
project: Development of supply chain model through demonstration*4 S elected as a NEDO Green Innovation Fund project: Hydrogen production throughwater electrolysis using power from renewables

Net sales by reportable segment

In catalysts, domestic and overseas demand for catalysts remained steady, primarily with FCC catalysts as fueldemand gradually returned.
In the Fine Chemicals sector, despite a worsening business environment in the semiconductor and electronics
market leading to a decrease in demand for silica sols usedin hard disk and semiconductor polishing and for silica sols
used as anti-reflective material in flat panel displays and tablets, demand for cosmetics materials remained steady.
In the Fine Ceramics sector, the previously strong semiconductor-related market began to suffer from slowing
demand for products used in semiconductor manufacturing, as device manufacturers adjusted production activities
and curtailed new capital investments. Meanwhile, demandfor high thermal conductivity silicon nitride substrates forelectric vehicles and hybrid vehicles continued to remainstrong, and so the decision was made in June and July,
2022 for capital investment and acquisition of land toincrease production of high thermal conductivity silicon
nitride substrates and other materials. To expand businessin the Fine Ceramics sector, operations commenced at JFC
Materials Co., Ltd. on July 1, 2022 following acquisition of
the ceramics business from Showa Denko Materials Co.,
Ltd. As a subsidiary of Japan Fine Ceramics Co., Ltd., ourGroup company in the Functional Materials Manufacturing
Business, JFC Materials Co. Ltd. will help increase production capacity and business performance of the JFC Group.

Current cash and cash equivalents (hereafter, “net cash”) on
a consolidated basis as of the end of the consolidated fiscal
year stood at ¥332,755 million, a year-on-year increase of¥44,746 million. The cash flow conditions and causes in thecurrent consolidated fiscal year are as follows.
With regard to cash flows from operating activities, inaddition to income before taxes on income of ¥48,811 million, a decrease in accounts receivable was the major contributor to give a total of ¥110,769 million for the current
fiscal year, an increase of ¥19,311 million compared to theprevious fiscal year.
Cash flows from investing activities amounted to ¥11,471
million used in these activities, mainly due to payments forpurchases of property, plant and equipment, compared to(Billions of yen)
120

800

564.0

551.6
426.8

400

388.5

60
20

2017

2018

46.6

2019

44.2

40.7

2020

2021

■■ Total Engineering Business■■ Functional Materials Manufacturing Business

93

5.5

17.2
11.7

12.4
–4.6

–20
45.9

JGC Report 2023

99.3

40

377.9

200

0

92.4

80

0

42.1

110.7

111.8

100

670.0

47.7
2022 (FY)¥7,695 million used in these activities in the previous fiscal
year.
Cash flows used in financing activities amounted ¥61,288
million, mainly due to redemption of corporate bonds, compared to cash flows provided by financing activities of ¥148
million in the previous fiscal year.

Analysis of new contracts
In the current consolidated fiscal year, orders received
totaled ¥878,789 million.
The method used to calculate new contracts was changed
from the current consolidated fiscal year, and includes
new contracts of the Functional Materials Manufacturing
Business. The tables below provide a breakdown of newcontracts by sector and region.

New Contracts by Business Sector 
2022

–40
–60

–55.2

2017

19.3

(Billions of yen)

2023

2023
(Percentageof new
contracts)

Total Engineering Business
Energy Transition

220.3

780.5

–

Oil and gas

92.8

349.7

39.8%

LNG

48.0

147.1

16.7%

Chemical

48.3

212.1

24.1%

Clean energy

28.6

61.8

7.0%

Others

2.5

9.6

1.1%

Healthcare & Life sciences

83.2

38.3

4.4%

Industrial & Urban infrastructure

5.6

4.1

0.5%

Others

0.2

0.9

0.1%

Cash Flows

Cash flows(Billions of yen)

600

Functional Materials Manufacturing Business

Functional Materials Manufacturing
Business

–

47.7

5.4%

Other Businesses

–

7.0

0.8%

New Contracts by Region (Billions of yen)

2022

2023

2023
(Percentageof new
contracts)

Japan

166.4

127.6

15.5%

Asia

67.8

251.0

30.5%

Middle East

62.7

310.1

37.6%

Africa

2.0

10.1

1.2%

North America & Other

10.3

125.0

15.2%

Future outlook
Total Engineering BusinessIn the Energy Solutions Business and Sustainable Solutions
Business, there are concerns about ongoing future uncertainties in the business environment due to long-term inflation and tightening monetary control causing a slowdown in
the global economy. Meanwhile, with energy shortages asmuch of the world decouples from Russia and makes efforts
to diversify suppliers, clients seeking to secure stable energy
supplies over the medium to long term are slated to continue
moving forward with their capital investment plans with afocus on natural gas and LNG, the importance of which has
been reconfirmed as a transitional energy—a stable energy
source in the shift to a low-carbon or decarbonized society.
Furthermore, with the global trend toward low-carbon anddecarbonization, capital investment plans are anticipatedin low-carbon and carbon-free sectors like hydrogen/fuelammonia and SAF, as well as the circular economy sector.
In the Facility Infrastructure Solutions Business as well,
we anticipate steady growth in customer capital investment
plans toward industrial infrastructure and advanced industries, driven by population and economic growth in emerging
economies and elsewhere, with the need for decarbonization as a background factor.
The domestic sector, there has been ongoing capital
investment in industrial infrastructure focused on refinery
maintenance, healthcare & life sciences, and chemicals, aswell as anticipated growth in customer capital investmentsin the low-carbon and decarbonization-related sector suchas hydrogen/fuel ammonia and SAF toward achieving Green
Transformation (GX) set forth by the Japanese government,
and the circular economy sector.

Functional Materials Manufacturing Business
Turning to the Functional Materials Manufacturing Business,in catalysts, we will seek a larger domestic market share for
FCC catalysts and continue developing overseas operations, maintain our partnerships and improve profitability
for hydrotreating catalysts, work to secure new chemical
catalyst contracts, develop new chemical catalyst products
for the growing carbon recycling and chemical recycling sectors, and develop materials for environmental conservation
catalysts for renewable energy power generation. In finechemicals, despite concerns over a worsening businessenvironment in our core electronics and semiconductor
markets, we will focus on launching new silica sol polishingmaterials, expanding functional coating material sales andapplications, developing cosmetic microbead alternatives,and expanding optical material sales and applications.
In fine ceramics, despite ongoing concerns over a worsening business environment in the semiconductor manufacturing equipment market, we will continue working to acquire
new clients and enter new areas, and seek increased orders
for high thermal conductivity silicon nitride substrates.

11.6

–1.0
–13.5

–7.6

2020

2021

–11.4

–59.9

2018

2019

2022 (FY)■■ Cash Flows from Operating Activities■■ Cash Flows from Investing Activities■■ Free Cash FlowJGC Report 2023

94

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Results of Value Creation

Consolidated Balance Sheets
Years ended March 31, 2023 and 2022

The translation of the Japanese yen amounts into U.S. dollars, using the prevailing exchange
rate at March 31, 2023 of ¥133.53 to U.S.$1, is included solery for the convenience ofreaders outside Japan.
Millions of yen

ASSETS

2022

2023

Millions of U.S. dollars

Millions of yen

LIABILITIES

2023

CURRENT ASSETS

Millions of U.S. dollars

2022

2023

2023

63,25890,005674

CURRENT LIABILITIESCash and deposits

288,159

332,951

2,493

Notes payable, accounts payable for construction contracts and otherNotes receivable, trade receivables, contract assets and other141,222

141,846

1,062

Short-term borrowings

2,167

2,336

17

Costs on construction contracts in progress

23,804

16,981

127

Current portion of bonds payable

30,00010,00075

Merchandise and finished goods

6,659

7,760

58

Current portion of long-term borrowings

8,660

544

4

Work in process

2,970

3,236

24

Income taxes payable

5,244

4,794

36

109,756

113,989

854

6,880

12,509

94

274

299

2
6

Raw materials and supplies

3,596

4,520

34

Contract liabilities

Accounts receivable-others

64,42325,710193

Provision for bonuses

Other

6,069

6,802

51

Provision for bonuses for directors (and other officers)

Allowance for doubtful accounts(3,562)

(315)

(2)

Provision for losses on construction contracts

533,343

539,493

4,040

TOTAL CURRENT ASSETS

384

838

Provision for warranties for completed construction

1,074

958

7

Other

26,13535,929269

TOTAL CURRENT LIABILITIES

253,836

272,206

2,039

Bonds payable

20,00010,00075

Long-term borrowings

11,496

13,891

104

Retirement benefit liability

15,884

12,803

96

210

233

2
11

NON-CURRENT LIABILITIESNON-CURRENT ASSETS

Provision for retirement benefits for directors (and other officers)

PROPERTY, PLANT AND EQUIPMENT
Buildings and structures
Machinery, vehicles, tools, furniture and fixtures

74,181
71,13375,001
72,569562

Deferred tax liabilities

1,089

1,438

543

Deferred tax liabilities for land revaluation

1,014

1,014

8

Other

3,080

3,557

27

Land

18,617

18,639140

Leased assets

1,079

2,690

20

Construction in progress
Other
Accumulated depreciation
TOTAL PROPERTY, PLANT AND EQUIPMENT

42,939322

315,145

2,360

Share capital

23,672

23,733178

Capital surplus

25,77025,831

193

342,198

369,066

2,764(6,740)(26,741)(200)

384,901

391,889

2,935

6,311

7,219

54

803

2,928

22

4,795

—

—

NET ASSETS(101,075)(99,595)(746)

69,534

72,234541

INTANGIBLE ASSETSSHAREHOLDERS’ EQUITY

Software

7,228

10,65080

Retained earnings

Other

2,447

374

3

Treasury stock

TOTAL INTANGIBLE ASSETS

9,676

11,02583

TOTAL SHAREHOLDERS’ EQUITY

Investment securities

55,83759,224444

Valuation difference on available-for-sale securities

Long-term loans receivable

8,640

11,07483

Deferred gains or losses on hedges

Retirement benefit asset

1,506

1,277

10

Revaluation reserve for landDeferred tax assets

13,557

15,483116

Foreign currency translation adjustments

Other

16,00225,333190

Remeasurements of defined benefit plans

(424)

677

5

Allowance for doubtful accounts(13,824)(22,018)(165)

TOTAL ACCUMULATED OTHER COMPREHENSIVE INCOME

2,244

5,454

41

TOTAL INVESTMENTS AND OTHER ASSETS

81,72090,373

677

517

637

5

TOTAL NON-CURRENT ASSETS

160,930

173,633

1,300

TOTAL NET ASSETS

387,662

397,9812,980

694,274

713,127

5,341

TOTAL LIABILITIES AND NET ASSETS

694,274

713,127

5,341

INVESTMENTS AND OTHER ASSETSTOTAL ASSETS

95

52,775
306,612TOTAL NON-CURRENT LIABILITIESTOTAL LIABILITIESJGC Report 2023

ACCUMULATED OTHER COMPREHENSIVE INCOME

NON-CONTROLLING INTERESTS

3,786

2,359

18

(10,891)(10,891)

(82)

3,462

6,089

46

JGC Report 2023

96

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Results of Value Creation

Results of Value Creation

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income

Years ended March 31, 2023 and 2022

Years ended March 31, 2023 and 2022
Millions of yen

Millions of U.S. dollars

Millions of yen

Millions of U.S. dollars

2022

2023

2023

NET SALES

428,401

606,890

4,545

PROFIT (LOSS)

COST OF SALES

383,029

540,164

4,045

OTHER COMPREHENSIVE INCOMEGROSS PROFIT

45,372

66,725500

Valuation difference on a available-for-sale securities

653

(177)

(1)

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

24,68330,026

225

Deferred gains or losses on hedges

2,855(2,979)(22)

OPERATING PROFIT

20,68836,699275

Foreign currency translation adjustments

3,220

1,387

10

Remeasurements of defined benefit plans

(4)

1,215

9

1,410

3,933

29

NON-OPERATING INCOME
Interest income

1,060

7,364

55

Dividend income

2,103

2,119

16

Share of profit of entities accounted for using equity method

3,014

2,714

20

Foreign exchange gains

2,528

2,833

21

Share of other comprehensive income of entities accounted forusing equity method
TOTAL OTHER COMPREHENSIVE INCOME
COMPREHENSIVE INCOME

2022

2023

(35,496)

30,047

2023

225

8,135

3,378

25

(27,360)

33,425250

COMPREHENSIVE INCOME ATTRIBUTABLE TO

Other

1,124

226

2

TOTAL NON-OPERATING INCOME

9,831

15,259114

COMPREHENSIVE INCOME ATTRIBUTABLE TO OWNERS OF PARENT(27,415)33,875254

9COMPREHENSIVE INCOME ATTRIBUTABLE TO NON-CONTROLLINGINTERESTS

54

(449)

(3)

OTHER EXPENSES
Interest expense

419

1,162

Other

72

235

2

TOTAL OTHER EXPENSES

491

1,397

10

30,02850,560379

Gain on change in equity

—

1,318

10

Gain on sales of investment securities

799

399

3

Gain on liquidation of subsidiaries and associates

179

—

—

Gain on sales of receivables

—

2,079

16

Other

8

5

0

987

3,802

28

Impairment losses

—

2,525

19

Loss on valuation of investment securities

397

992

7

Loss on valuation of investments in capital of subsidiaries and associates

—

1,727

13

57,576

—

—

301

307

2

Total extraordinary losses

58,2755,552

42Profit (loss) before income taxes

ORDINARY PROFITEXTRAORDINARY INCOME

Total extraordinary income
EXTRAORDINARY LOSSES

Loss on Ichthys LNG Project
Other(27,260)

48,811

366

Income taxes - current

7,773

19,302

145

Income taxes - deferred

463

(538)

(4)

8,236

18,763

141(35,496)

30,047

225

54

(618)

(5)

(35,551)

30,665230

Total income taxes
PROFIT (LOSS)PROFIT (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTERESTSPROFIT (LOSS) ATTRIBUTABLE TO OWNERS OF PARENT

97

JGC Report 2023

JGC Report 2023

98

Management Messages

JGC Group's Growth Strategy

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Results of Value Creation

Consolidated Statements of Changes in Net Assets
Years ended March 31, 2023 and 2022
Millions of yen

Shareholders’ equity
Share capital

Capital surplus

Year ended March 31, 2022
Balance at beginning of period

23,61125,709Cumulative effects of changes inaccounting policies
Restated balance

Retainedearnings

380,402

Accumulated other comprehensive income
Treasury shares(6,739)312
23,61125,70961

61

380,714

Total
shareholders’equity422,983

Valuationdifference on
available-for-salesecurities

5,571

Deferred gains
or losses onhedges248

Revaluation
reserve forland

Foreigncurrencytranslation
adjustment(10,891)(358)

Remeasurementsof defined benefit
plans

(432)

Total accumulated
othercomprehensive
income(5,862)

Non-controllinginterests

495

312(6,739)423,295

Total net assets

417,616
312

5,571

248

(10,891)

(358)

(432)

(5,862)495

417,928

Changes during period
Issuance of new shares
Dividends of surplus(3,029)Loss attributable to owners of parent(35,551)(0)

Purchase of treasury shares
64

Change in scope of consolidation

Balance at end of period

122(3,029)(3,029)(35,551)(35,551)

(0)

(0)

64

Net changes in items other thanshareholders’ equity
Total changes during period

122

(28)

(28)

36

—

740

3,537

—

3,849

8

8,135

21

8,157

61

61

(38,515)(0)(38,394)

740

3,537

—

3,820

8

8,107

21

(30,265)

23,672

25,770342,198(6,740)384,901

6,311

3,786

(10,891)

3,462

(424)

2,244

517

387,662
Millions of yen

Shareholders’ equity
Share capital

Capital surplus

Year ended March 31, 2023
Balance at beginning of period

23,672

25,77060

60Retainedearnings

342,198

Accumulated other comprehensive income
Treasury shares(6,740)Total
shareholders’equity384,901

Valuationdifference on
available-for-salesecurities

6,311

Deferred gains
or losses onhedges3,786

Revaluation
reserve forland

Foreigncurrencytranslation
adjustment(10,891)

3,462

Remeasurementsof defined benefit
plans

(424)

Total accumulated
othercomprehensive
income2,244

Non-controllinginterests

517

Total net assets

387,662

Changes during period
120

120

Dividends of surplus

Issuance of new shares(3,788)(3,788)(3,788)

Profit attributable to owners of parent

30,66530,66530,665(20,000)(20,000)(8)(8)

Purchase of treasury shares(20,000)

Change in scope of consolidation(8)

Net changes in items other thanshareholders’ equity
Total changes during period
Balance at end of period—

907(1,426)

—

2,627

1,101

3,210

120

3,330

60

60

26,868(20,000)

6,988

907

(1,426)

—

2,627

1,101

3,210

120

10,31823,73325,831

369,066(26,741)

391,889

7,219

2,359

(10,891)

6,089

677

5,454

637

397,981Millions of U.S. dollars

Shareholders’ equity
Share capital

Capital surplus

Year ended March 31, 2023
Balance at beginning of period

177

193

0

0

Retainedearnings

2,563

Accumulated other comprehensive income
Treasury shares

(50)

Total
shareholders’equity2,883

Valuationdifference on
available-for-salesecurities

47

Deferred gains
or losses onhedges28

Revaluation
reserve for
land

(82)

Foreigncurrencytranslation
adjustment

26

Remeasurementsof defined benefit
plans

(3)

Total accumulated
othercomprehensive
income17

Non-controllinginterests

4

Total net assets

2,903

Changes during period
Issuance of new shares

1

1

Dividends of surplus

(28)

(28)

(28)

Profit attributable to owners of parent

230

230

230

(150)

(150)

(0)

(0)

Purchase of treasury shares(150)

Change in scope of consolidation(0)

Net changes in items other thanshareholders’ equity
Total changes during period
Balance at end of period99

JGC Report 2023

—

7

(11)

—

20

8

24

1

25

0

0

201

(150)

52

7

(11)

—

20

8

24

1

77

178

193

2,764

(200)

2,935

54

18

(82)

46

5

41

5

2,980

JGC Report 2023 100

Management Messages

JGC Group's Growth Strategy

Results of Value Creation

Results of Value Creation

Consolidated Statements of Cash Flows

Group Companies

Years ended March 31, 2023 and 2022

(As of March 31, 2023)

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"● Consolidated subsidiaries● Affiliated companies accounted for by the equity method

Millions of yen
2022

2023

Millions of U.S. dollars
2023

Industry

CASH FLOWS FROM OPERATING ACTIVITIES(27,260)

48,811366

Depreciation
Impairment losses

7,202
—

7,839
2,525

59
19

Increase (decrease) in allowance for doubtful accounts

3,712

4,489

(3,164)419(4,419)(3,014)
3,326

Profit (loss) before income taxes

Interest and dividend income
Interest expense
Foreign exchange losses (gains)Share of loss (profit) of entities accounted for using equity method
Decrease (increase) in notes receivable, trade receivables,
contract assets and other
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable - trade
Loss (gain) on sale of investment securities
Increase (decrease) in retirement benefit liabilities
Increase (decrease) in provision for loss on construction contracts
Loss (gain) on valuation of investment securities
Loss on valuation of investments in capital of subsidiaries and associates
Loss (gain) on change in equity
Increase (decrease) in contract liabilities
Decrease (increase) in accounts receivable - other
Increase (decrease) in accounts payable - other
Gain on sale of receivables
Other, net
SubtotalInterest and dividends received
Interest paid
Proceeds from sale of receivables
Income taxes paid
Cash flows from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Purchase of investment securities
Proceeds from sale of investment securities
Purchase of intangible assets
Proceeds from sale of intangible assets
Proceeds from capital reduction of investments
Other, net
CASH FLOWS FROM INVESTING ACTIVITIES:CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings
Repayments of long-term borrowings
Redemption of bonds
Dividends paid
Dividends paid to non-controlling interests
Net increase (decrease) in short-term borrowings
Purchase of treasury stock
Other, net
CASH FLOWS FROM 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 PERIODINCREASE IN CASH AND CASH EQUIVALENTS FROM INCLUSION
OF SUBSIDARIES IN CONSOLIDATIONCASH AND CASH EQUIVALENTS AT END OF PERIOD

101 JGC Report 2023

● Affiliated companies not accounted for by the equity method

Total Engineering Business(3,742)
19,072(799)
353(3,251)
397
—
—
8,739
33,328(13,437)—(895)
16,567
5,341
(419)
—
(2,177)
19,311(5,467)9(2,435)
2,835(4,339)—1,064
637(7,695)Name● JGC CORPORATIONCountry

CapitalPercentage ofvoting rights
owned*

Japan¥1.0 billion

100%● JGC JAPAN CORPORATION

Japan¥1.0 billion

100%

Singapore

S$2,100,000

100%

34

● JGC ASIA PACIFIC PTE. LTD.
● JGC PHILIPPINES, INC.

The Philippines

PHP1,300,000,000(9,484)
1,162(11,761)(2,714)

(71)
9
(88)
(20)

● PT. JGC INDONESIA

Indonesia

IDR1,357,050,000● JGC Gulf International Co. Ltd.

Saudi Arabia

SAR262,500,000● JGC OCEANIA PTY LTD

Australia

A$913,800,000

100%
49%
(14%)
100%
(5%)
100%

898

7

● JGC America, Inc.

U.S.A.

US$41,051,000● JGC Gulf Engineering Co. Ltd.

Saudi Arabia

SAR500,000● JGC Construction International Pte. Ltd.

Singapore

US$1,043,000● JGC ASIA PACIFIC (M) SDN. BHD.

Malaysia

MYR750,000● JGC INDIA EPC PRIVATE LIMITEDIndia

INR280,000,000● JGC Vietnam Co., Ltd.

Vietnam

VND519,831,000,000● Japan NuScale Innovation, LLC

U.S.A.

US$173,008,000

29%
(29%)

Inspection / Maintenance● JGC PLANTECH AOMORI Co., Ltd.

Japan

¥50 million

100%(100%)

Process Licensing● Nikki-Universal Co., Ltd.

Japan

¥1.0 billion

50%

5,310
26,594(398)(3,324)
429
992
1,727
(1,318)3,753
36,5797,177(2,079)6,820
124,029
9,985
(932)
2,079
(24,392)
110,769(6,565)150(2,629)939(5,573)
1,796
733
(322)
(11,471)

40
199
(3)
(25)
3
7
13
(10)
28
274
54
(16)
51
929
75
(7)
16
(183)
830
(49)
1
(20)
7
(42)
13
5
(2)
(86)

1,617
(370)

2,324
(9,197)17(69)—(3,031)
(33)
1,819
(0)
(148)
(148)

(30,000)(3,789)(44)56(20,000)(637)(61,288)

(225)
(28)
(0)
0
(150)
(5)
(459)

7,968

6,592

49

19,436268,281

44,602
288,009

334
2,157

291

144

1

288,009332,755

2,492

EPC

100%
75%
(75%)
100%
(100%)
100%(100%)
100%(100%)
100%(62%)

Functional Material Manufacturing Business
Name

Country

CapitalPercentage ofvoting rights
owned*● JGC Catalysts and Chemicals Ltd.

Japan

¥1.8 billion

100%● Japan Fine Ceramics Co., Ltd.

Japan

¥0.3 billion

100%● Nikki-Universal Co., Ltd.

Japan

¥1.0 billion

50%

Other Businesses
Industry

Name

Country

CapitalPercentage ofvoting rights
owned*

Equipment Procurement● JGC Trading & Services Co., Ltd.

Japan

¥40 million

Consulting● Japan NUS CO., LTD.

Japan

¥50 million

88%

Office Support Services● NIKKI BUSINESS SERVICES CO., LTD.

Japan

¥1,455 million

100%

Water Treatment● Swing CorporationJapan¥5.5 billion

33%

Japan

¥0.1 billion● Swing Engineering CorporationJapan¥0.3 billion[100%][100%]● JGC (GULF COAST), LLC

U.S.A.

US$51,050,000● JGC Exploration Eagle Ford LLC

U.S.A.

US$46,700,000● JGC EXPLORATION CANADA LTD.

Canada

C$160,885,000

100%(100%)
100%(100%)100%

Oman

OMR7,500,000

75%● A. R. C. H WLL●A SH SHARQIYAH OPERATION AND
MAINTENANCE COMPANY LLC

Bahrain

US$758,000

30%

Saudi Arabia

SAR1,000,00029%● Japan Sankofa Offshore Production Pte. Ltd.

Singapore

US$29,824,000

26%● Swing AM Corporation

Oil and Gas Production Sales

Water Desalination

FPSO(Floating Production, Storage andOffloading system)● Al Asilah Desalination Company S. A. O. C.

24%* Figures in parentheses ( ) in percentage of voting rights owned ratio are indirect ownership ratios, and figures in parentheses [ ] are ownership ratios held by persons closely related toor in agreement with the company, and are outside figures.

JGC Report 2023 102

Management Messages

JGC Group's Growth Strategy

Results of Value Creation

Results of Value Creation

Stock Information

Outline of JGC(As of March 31, 2023)(As of March 31, 2023)

Major Shareholders

Authorized Shares
600,000,000
Issued and Outstanding Shares
259,409,926
Number of Shareholders
36,924
Administrator of the Shareholders’Register
Mitsubishi UFJ Trust and Banking
Corp.1-4-5, Marunouchi, Chiyoda-ku,
Tokyo 100-8212, Japan

Reinforcing Management
Resources for Continuous Growth"Sustainability Management"

Reinforcing Management
Results of Value Creation
Resources for Continuous Growth"Corporate Governance"

Company NameJGC HOLDINGS CORPORATION

Numberof shares(thousands)

Percentage
of total(%)

The Master Trust Bank of Japan, Ltd. (Trust Account)

46,21019.20

Custody Bank of Japan, Ltd. (Trust Account)

36,52915.18

JGC Trading & Services Co., Ltd.

12,112

5.03

JGC-S SCHOLARSHIP FOUNDATION

8,433

3.50

SSBTC CLIENT OMNIBUS ACCOUNT

7,014

2.91

Capital stock

Sumitomo Mitsui Banking Corporation

5,500

2.28

¥23,733,170,000

BNYM AS AGT/CLTS NON TREATY JASDEC

3,724

1.54

Employees

Mizuho Bank, Ltd.

2,899

1.20

313 (Consolidated: 7,876)

JP MORGAN CHASE BANK 385781

2,866

1.19

JPMorgan Securities Japan Co., Ltd.

2,675

1.11

Head Office2-3-1, Minato Mirai, Nishi-ku, Yokohama-shi, Kanagawa 220-6001, Japan
Established
October 25, 1928

Independent Auditor
KPMG AZSA LLC(Notes) 1. N umber of shares is rounded down to the nearest thousand. Percentage of total is rounded down to thesecond decimal place.
2. T he Company holds 18,820 thousand shares (7.26%, 3rd) of treasury stock, but this is excluded from theabove table.
3. Percentage of total is calculated excluding treasury stock.

Distribution of Shareholders

Information Provided(%)
Financial
institutions

Treasury stock■ Financial institutions

Foreigninvestors

Financial
instruments
firms

Individuals
and others

39.02■ Financial instruments firms

3.85■ Other domestic corporations

11.59■ Individuals and others

10.93■ Foreign investors

27.35■ Treasury stock

7.26

About Us

https://www.jgc.com/en/about/

Narrow

Other domestic
corporations

Stock Price
JGC Holdings Stock Price (Yen)

Nikkei Average (Yen)
50,000

5,000
4,000

30,00050,000

2,000
4,000

20,00040,0001,000

JGC Holdings Stock Price0100,000

2019
1

2

2020
3

4

5

6

7

8

9 10 11 12 1

2019
1

2

2

2021
3

4

5

6

7

8

2020
3

4

5

6

7

8

9 10 11 12 1

2

9 10 11 12 1

2

2022
3

4

5

6

7

8

9 10 11 12 1

2021
3

4

5

6

7

8

9 10 11 12 1

3

4

5

6

7

8

9 10 11 12 1

3

4

5

6

7

8

9 10 11 12 1

2

2

4

5

6

7

8

9 10 11 12 1

2022
3

4

5

6

7

8

9 10 11 12 1

3

4

5

6

7

8

9 10 11 12 1

3

4

5

6

7

8

9 10 11 12 1

3

4

5

6

7

8

9 10 11 12 1

3

4

5

6

7

8

9

10,000

2

0
3

4

5

6

7

8

9

80,000 (Thousands of shares)
Volume60,000100,000
40,00080,00020,00060,000040,0002019

20,000

1

0

2

2020
3

4

5

6

7

8

9 10 11 12 1

3

4

5

6

7

8

9 10 11 12 1

2019
1

2

2

2021

2020

103 JGC Report 2023

2

2

2022

2021
2

2

CriticalContent

Investor Relations

https://www.jgc.com/en/ir/• IR Calendar• Financial Information• Securities Reports/Quarterly Reports• Management Strategy• Fact Sheet, etc.

2023
3

4

5

6

7

8

9 10 11 12 1

3

4

5

6

7

8

9 10 11 12 1

2022
2

Detailed(Comprehensive)0
20,0002

2023

2• Realizing a Sustainable Society• Environmental Initiatives• Social Initiatives• Governance, etc.

10,00030,0002023
3

https://www.jgc.com/en/esg-hsse/

Broad

3,000
5,000

0
2,000

Sustainability

JGC
Website40,000

Nikkei Average

1,000
3,000

JGC Report(Integrated Report)

Target (Primarily aimed at investors)

Figures have been rounded down to the second decimal places.

• Message from Top Management• JGC’s Purpose and Values• Group Companies• History• JGC Group at a Glance, etc.

2

3

4

5

6

7

8

9

2023
2

3

4

5

6

7

8

9

JGC Report 2023 104