Engineering for
Sustainable Growthof the Global Community

2022 Integrated Report
Year ended March 31, 2022

Contents

TOYO’s MVVManagement Vision

Foundation for Sustainable Growth02

President’s Message

36

Mission and Materiality

04

The Society TOYO Aspires to Be

37

Sustainability Initiatives

06

The Chronicle of TOYO38

E: Aim to Realize an Environmentally Friendly Society

08

TOYO’s Engineering Business and Strengths

10Dialogue: The roles and expectations of TOYO as anengineering company in realizing an environmentallyfriendly society

16

Message from the CFO

Engineering for Sustainable Growth of
the Global Community

18

Financial and Non-Financial Highlights

20

Outline of Medium-term Management Plan
(FY2021–FY2025)

By undertaking engineering that melds elemental technologies andoptimizes the overall system, we will comprehensively solve various
issues and contribute to creating a sustainable global community.

22

Market Environment and Priority Measures By Business
Field

24

Strategy “Sustainable Technology and Business
Development”

Mission, Vision, Values

Engineering for
Sustainable Growth of
the Global Community

Global Leading Engineering
Partner
MissionVisionValuesIntegrity, Creativity, Diversity,
Learning, Team

Medium-term Management Plan

46

Aim to realize anenvironmentallyfriendly society

Enrichpeople’s lives

People of diverse
backgrounds
engage in active,
meaningful work

Establish anorganization
with integrity
and discipline

S: “Enrich people’s lives” and “People of diverse backgrounds engage in active, meaningful work”

28

G: Establish an Organization with Integrity and Discipline
46 Directors and Audit & Supervisory Board Members
48 Outside Director’s Message

26 ATB’s Challenge—Solving social problems using
technology developed for chemical engineering

Governance

42

44 Social Contributions

Materiality and Our Commitment

Social40 Environment

42 Human Capital

24 Promoting Sustainable Technology and Business
Development Strategy
Balancing Environmental and Economic Considerations
through Technology and Business Development

Environment

38 Addressing Climate Change (Disclosure Based on TCFD
Recommendations)

50 Corporate Governance
55 Compliance
56 Risk Management
58 Safety, Quality and Environment (SQE) Initiatives

Data Section
60

ESG Data

Strategy “Advanced EPC Operation”

62

Ten-Year Financial Highlights

28 India64

Corporate Information / Stock Information

30 China
32 Brazil
34 Using DX to Improve TOYO’s Project Execution

Tool System Diagram

Corporate Slogans

Your Success, Our Pride.
“Desire to make TOYO a company that clients are truly happy to have chosen”

Integrated Report—Cover page—The blue section to the left is a TOYO ad
created about forty years ago and depicts
employees dreaming of creating an affluent
world through plants they are working onaround the world. We pay homage to it withthe green section that depicts the current turbulent world many years later, in which young
employees who have taken over the ideas
and technology of their predecessors dreamof achieving a new green society.

WebsiteSee here for details.

https://www.toyo-eng.com/jp/en/
DigestOverview“Desire to make TOYO into an attractive company that employees can take pride inamong their families”

Specific data
• Securities Report

These TOYO corporate slogans express the uniform feelings of our employees.

• Financial Statements• Report for Shareholders• Financial Information
Corporate Brochure

Newsletter“TOYO TIMES”• Corporate Governance Report

TOYO ENGINEERING CORPORATION

Integrated Report 2022

01

President’s Message

Transformation is in TOYO’s DNA
Management Vision

Evolving with the times
Established in 1961, Toyo Engineering (TOYO) celebrated its 60th anniversary last year. Initially, our business centered on building plants for fertilizers such as ammonia and urea. Indeed, in our third year of business, we received an order for a fertilizer plantin India; this was not only the first plant we built overseas, it was also one of the largest fertilizer plants in the world at that time.
The plant engineering industry relies on orders from customers, and for this reason, it experiences ups and downs. However,by responding to the changing needs of the times—or, indeed, by proactively creating needs—we have both expanded and transformed the fields, regions and our customer base.
Over the last few years, the world has undergone astonishing change, exemplified by the rise and spread of COVID-19, by thedrive for carbon neutrality, and by the Russian invasion of Ukraine.

Committed to achieving our Medium-term Management Plan (FY2021-FY2025)
Medium-term Management Plan

Today, countries around the world are accelerating their initiatives for realizing carbon neutrality. As such, there is a growing needfor and an increasing attention on the use of ammonia as a fuel and the production of methanol from CO2—fields that we at TOYO
have vast experience in. In these fields, we are utilizing the expertise and experience in engineering, procurement, and construction (EPC) we have acquired over the course of many years; we are also seeking to establish value chains that exceed the traditional
EPC framework. As an engineering company, technological and project management skills lie at the very heart of what we do. We
intend to refine these skills and leverage them in our attempts to develop new business fields, technologies, and business models
and, in this way, continue to provide value to society.
After joining TOYO, I was first posted to one of our engineering departments. I was next transferred to the project management
department, where I gained experience in the field of industrial plants—something that was not mainstream at TOYO at the time.
Then, after being appointed president of our Malaysian subsidiary, I contributed to the launch and expansion of our infrastructurebusiness, which encompassed power generation, transportation, and water treatment.
Looking back, I can say that I, too, experienced how TOYO responded to changes in the business environment and continually

Foundation for Sustainable Growthtransformed itself in the light of new challenges. I learned about the faith, passion, and foresight of our predecessors; and about
the attitude of our top management, who identified and sought to nurture their ambition.
Since assuming the presidency, I have called on TOYO employees not to fear failure but, instead, to boldly develop new methods and set lofty goals for themselves. This was the context in which the Medium-term Management Plan, which lays out a newpath for TOYO, was born. The Plan has been discussed at department, section, and group levels, and employees are increasingly
taking personal responsibility for its realization.
The Russian invasion of Ukraine has sparked a renewed awareness of the importance of energy security and led many countries
to reconsider their energy transition strategies. The Medium-term Management Plan we formulated last year comprises two strategies: the Green Strategy “Sustainable Technology and Business Development” and the Blue Strategy “Advanced EPC Operation.”
It is, I believe, exceptionally well suited to the current global situation.
We also intend to bolster our partnering strategies, tailoring them to the strengths of each of our companies, with the twin
aims of resolving increasingly complex social issues and of developing our business with greater speed. In the second year of our
Medium-term Management Plan, we are fully committed to steadily executing our strategies and achieving our goals.

For the satisfaction of our stakeholders
The TOYO Group employs a total workforce of about 6,000 people. When I was appointed president, I resolved to turn TOYO into
Data Section

a company that employees could talk to their families about with pride. I have a powerful desire to ensure that our employees are
happy and motivated. And, enabling each employee to fully demonstrate his or her potential will help us provide society with services that are high in added value; this, in turn, will elicit the satisfaction and trust of our stakeholders.
I will lead the Group in our united and continuing efforts to achieve TOYO’s mission: “Engineering for Sustainable Growth of the
Global Community.”

Haruo Nagamatsu, President & CEO

02

TOYO ENGINEERING CORPORATION

Integrated Report 2022

03

The Society TOYO Aspires to Be
We will leverage the high-tech application capabilities and expertise we have cultivated to provide optimal solutions, aiming to realize a society that enriches people’s lives and is environmentally friendly.

Social issues

Business
opportunities

Mission and Business Activities

Mission• Power plants

Food shortage due topopulation growth
Energy shortage• Renewable energy
facilities

Aim to realize anenvironmentallyfriendly society• CO2 Capture, Utilizationand Storage (CCUS)
facilities

Establish anorganization withintegrity and discipline

Power

Environmentallyfriendlyindustrial plants

Clean
infrastructure

Engineering Business• Low-carbon and decarbonization plants andconsulting service

P08

Pharmaceuticals• Circular plants that
operate on biomass
and waste

PowerFoundation for Sustainable Growth

Global warming andclimate change

P36

People of diverse
backgrounds engage inactive, meaningful work

Enrich people’s lives

Sustainable society
Medium-term Management Plan

• Fertilizer plants

Society TOYO Aspires to Be

Engineering for Sustainable Growth of the Global Community
Materiality

Management Vision

Social Issues andBusiness Opportunities

Waste• Streamlining plant construction and operation
with digital transformation (DX)

Increasing plant
productivity,
streamlining, andmanaging aging plants• Repairs and modification to low environmental impact plants

Engineering

Construction

Procurement

Operation &MaintenanceMedium-term Management Plan (FY2021-FY2025)

Fertilizers

P20“Sustainable
Technology and Business
Development”

Chemicals“Advanced
EPC Operation”

FuelPeople’s lives are inharmony withthe environment

Management Base
Global Operation Capabilities

Human Capital

P08

P09

P42

Corporate Governance

Safety and Quality

DXoT*

P50

P56

P34

Data Section

Engineering Technologies*Digital Transformation of TOYO

04

TOYO ENGINEERING CORPORATION

Integrated Report 2022

TOYO ENGINEERING CORPORATION

Integrated Report 2022

05

The Chronicle of TOYO

1960s

1970s to the1980s

1990s

2000s

2010s

2020s

the

the

the

the

the

Expanding Overseas and Establishing a
Technical Foundation

Enhancing Our Technical Capabilities
and Expanding Our Business

Diversifying Our Portfolio

Establishing a Global TOYO Structure

Switching from Our Expansion Course• Enhanced risk management and CHANGE!

Sustainable Technology and Business
Development and Advanced EPC Operation• Received our first overseas order, an Indian fertilizer plant.

• Learned about various cutting-edge technologies to enhance our technical capabilities.
• Expanded our overseas group companies
to build up our global operation.

•Promoted the utilization of overseas groupcompanies and enhanced our solidarity.
• Started growing again due in part to the highprice of crude oil.

Established Group Companies
1961
Toyo-Japan1972
Toyo-Europe
1976
Toyo-India• Diversified our portfolio to include pharmaceuticals and power plant fields due to more
intense competition.

1986
Toyo-Malaysia, Toyo-USA

1998
Toyo-Brazil

1987
Toyo-Korea, TPS

Management Visionthe•Unveiled the Medium-term Management Plan
(FY2021-2025)• Promoting DX to increase productivity by six times

2010
Toyo-Canada

2004
Toyo-China

2011
IKPT (Indonesia)

New business area

Low-carbon andcirculation

Medium-term Management Plan

• Fuel ammonia• Biofuel• Waste plastic recycling• Energy consulting
Photo courtesy of JAL

Japan: Biojet Fuel• Middle molecule
pharmaceutical• Biopharmaceutical
Japan: Drug Substances

Thailand: Gas-fired Power Plant

Foundation for Sustainable Growth• Renewable energy
power plant• Thermal power plant

Infrastructure

Japan: Biomass Power Plant• CCS, CO2-EOR• Methane hydrate• Rare earth

Resource
development
Turkey: EOR
Photo courtesy of JAMSTEC

Japan: Rare Earth• Methanol• Ethylene

Petrochemicals
Oil & Gas

China: Ethylene

Singapore: Ethylene

Data Section• Ammonia• UreaFertilizer

India: Fertilizer
Nigeria: Fertilizer

Existing business area

Net sales

06

TOYO ENGINEERING CORPORATION

Integrated Report 2022

Indonesia: Fertilizer

TOYO ENGINEERING CORPORATION

Integrated Report 2022

07

TOYO’s Engineering Business*1 Front End Engineering Design (basic plans carried out after the feasibility study or concept design stage)*2 Water, steam, electricity, etc.

In conjunction with various partners around

Scope of TOYO’s businesses and services

the world, TOYO provides meticulous engi-

Feasibility studies

neering services tailored to the needs of its

Project execution

Commercial operations

to operational support, maintenance, andBasic planning / Feasibility studies

management at completed plants. In addi-

Operation & Maintenance
FEED*1tion to our standard EPC business, we also

Management Vision

PMC, Owner’s engineering

customers, from the initial planning stages

Plant Management

E ngineering

engage in project management contracts(PMCs), through which we manage projects

P rocurement

on behalf of our customers and owner’s
engineering. We are focused on our non-C onstruction

EPC businesses as well, such as the provision of licenses as a technology licenser

Commissioning

and various performance fee-based andsubscription-type businesses.

Performance fee-based and subscription-type business• HERO is our solution for energy savings and GHG reductions for both process systems and utilities*2 systems, via which we contribute to increased customer profitability• DX-PLANT® utilizes IoT and data analysis technologies to support remote plant management and increase operational efficiency.

Medium-term Management Plan

Other business
types

License provision businessWe provide licenses for our proprietary ACES21® urea
synthesis technology to urea manufacturers aroundthe world; as a licensor, we also provide post-construction technical support.

TOYO’s Strengths
At TOYO, our competitiveness is rooted in two key strengths: our technological capacity to solve challenges; and our
global EPC execution capabilities, which draws on the strengths of our numerous overseas Group companies. Basedon these dual strengths, we provide high-quality engineering services to customers around the world.

Engineering Technology

Global Operations

EPC by license global share (from 2001 onwards)
Intellectual property rights for process technologies are essential for constructing and operating plants. “Licenses” provide parties with the right to use these technologies, while the owners of the licenses are called “licensors.” Since our foundation, at
TOYO, we have owned proprietary licenses and collaborated with other licensors over the course of more than half a century in
the plant engineering and construction industry.

14%

TOYO (TOYO technology)

Urea
license10%

TOYO (KBR technology)

Ammonia
license

KBR

38％

10%

Toyo-China

TEC Project Services

Urea, Ammonia, Ethylene, FPSO*,
LNG regasification facilities, Refineries

Chinese investment projects fromJapan, Europe and the USA

Pharmaceuticals, Fine chemicals,
Environment, Petrochemicals

Ethylenelicense• Collaboration with KBR, a major U.S.
licensor, for more than 50 years• Collaboration with Lummus, a major
U.S. licensor, for more than 60 years• Completed more than 80 projects• Completed more than 40 projects

Toyo-Korea

IKPT (Indonesia)

Toyo-Malaysia

TSPI (Brazil)

Polymers (Polyethylene,
Polypropylene, etc.)

Renewable energy
power generation

Petrochemicals,
Specialty Chemicals

FPSO*

Data Section• Completed more than 100 projects
over more than 50 years

Toyo-India

TOYO

41％

• Energy-saving urea synthesis
technology

By concentrating its expertise in engineering technology at various Group companies, TOYO has refined global operations. Since
the 1990s, it has set the TOYO standard that underpins our Group’s quality, and ensured compliance among all Group companies.
Currently, the engineering capabilities of our Group companies are our greatest competitive strength.

(Lummustechnology)

Lummus• Proprietary license

Areas of expertise of TOYO group companies

Foundation for Sustainable Growth

TOYO’s history has been accompanied by changes in technological development, especially regarding proprietary technologies
and technologies offered in partnership with licensors. We have expanded our product fields and business areas by improving ourenergy-saving and environmental technologies. Now, in an effort to contribute to the societal need to realize carbon neutrality, we
will leverage the high-tech application capabilities, expertise, experience, and partnership skills that we have cultivated thus far to
make a circular society a reality.

• Utilizes expertise for the social
implementation of fuel ammonia*FPSO: Floating Production, Storage and Offloading

08

TOYO ENGINEERING CORPORATION

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TOYO ENGINEERING CORPORATION

Integrated Report 2022

09The roles and expectations of TOYO as an engineering
company in realizing an environmentally-friendly society

TOYO’s mission statement is “engineering for sustainable growth of the global community.” In keeping withthis objective, the entire Company is united on promoting initiatives with the aim of realizing an environmenManagement Vision

Contributing to decarbonization worldwide
as a project leader grounded on technology

tally-friendly society, one of the items of materiality positioned in our Medium-term Management Plan (2021–2025). We therefore invited Professor Masaru Nakaiwa to meet with President & CEO Haruo Nagamatsu in order
to discuss the roles and expectations of TOYO as an engineering company helping to bring about an environmentally-friendly society. Professor Nakaiwa has long participated in industry-government projects in the environment and energy fields and held important posts at the New Energy and Industrial Technology Development
Organization (NEDO)*1 and the National Institute of Advanced Industrial Science and Technology (AIST)*2.
*1 National research and development agency tasked with facilitating innovation by promoting the technological development required to bring about a sustainable society.
*2 One of Japan’s largest public research organizations that focuses on the creation and practical application of technologies useful to Japanese industry and society and on“bridging” the gap between innovative technological seeds and commercialization.

Nagamatsu For more than 60 years since TOYO was founded,

our principal business has been plant EPC work (engineering,munity taking bold steps towards the long-term goal of decarbonization, we are once again questioning the significance of
our existence as an engineering company. With this in mind,
we released our five-year medium-term management plan at
the end of March 2021. We are currently implementing thisplan with a double spiral approach that comprises a “green

Haruo Nagamatsu

Emeritus Researcher
National Institute of Advanced
Industrial Science and Technology

President & CEO

strategy” of new technology and business development inNakaiwa No longer is there any room to discuss the pros andthe focus areas of environment and energy, and a “blue strat-

cons of such a global movement as carbon neutrality. Thereegy” aimed at reinforcing EPC through the evolution of Groupis also no doubt that it presents considerable business oppor-

operations and digital transformation.

tunities to engineering companies because decarbonization

Particularly in terms of transformation, I believe the green

will require the retrofitting of plant facilities in the energy andstrategy holds the key to what we can actually achieve. In

resources sector, as well as in heavy manufacturing indus-

the green strategy we are focused on providing unique solu-

tries*6 that consume large amounts of energy, such as petro-tions to help realize a carbon-neutral society, especially in suchchemicals. That said, everybody is talking about the shift fromareas as the development of technology for producing sustain-

fossil fuels to renewable energy as if it is nothing out of theable aviation fuel (SAF*3), the CO2 recycling chain, and the fuelordinary, but the fact of the matter is, even the showpieces

ammonia value chain. In fiscal 2021, the first year of the medi-of carbon-neutral technology, like hydrogen and fuel ammo-

um-term management plan, we assiduously sowed the seeds

nia that do not produce CO2 when burned, present numer-of these solutions and also accelerated the pace of our initia-

ous challenges in terms of technological development andtives by establishing the Carbon Neutral Business Division.

the establishment of value chains, so there is no way soci-While it was a few years ago, Professor Nakaiwa actually
helped us develop

While we have no choice but to still rely on fossil fuels fortillation system. We are currently expanding the scale of ser-most of our energy needs during the transition phase, wevice business to customers considering the installation ofalso cannot sit idly by and wait for the adoption of ground-such equipment or to customers that have already done sobreaking energy technology in society, which is why we mustin an effort to ramp up our non-EPC businesses. We are now

keep pushing ahead with a low-carbon approach by conserv-

fielding more enquiries from within and outside Japan regard-

ing energy consumption.

TOYO ENGINEERING CORPORATIONIn other words, I believe it is extremely important that we

Data Section

consulting service.

Integrated Report 2022

ety can simply switch to renewable energy in a single bound.

® , our energy-saving dis*4

ing HERO*5, our energy-saving and GHG emission-reduction

10

Having a mastery of both state-ofthe-art carbon-neutral technology
and effective energy-saving
measures is key

Foundation for Sustainable Growth

Masaru Nakaiwa

Medium-term Management Planprocurement, and construction). With the international com-

*4 Delivers energy savings of more than 50% in various industrial applications in the
petrochemical and oil refinery industries by applying existing distillation technology
without the use of special equipment.
*5 Service that contributes to profit improvements for customers through the provisionof solutions that conserve energy consumption and reduce GHG emissions across allprocessing and utility systems.

incrementally roll out effective measures based on the rec-

In a nutshell, that is how our medium-term manage-

ognition that we will remain in a carbon neutrality transition

ment plan is progressing. I’d now like to hear what Professor

phase up until 2050. Going forward, the world must simul-

Nakaiwa thinks the role of an engineering company in realiz-taneously propel new initiatives for carbon neutrality—someing an environmentally-friendly society.

would say disruptive innovation—alongside energy-saving*3 Aviation fuel manufactured from biomass and other sustainable feedstocks characterized by low CO2 emissions, in the process from procurement of raw materials to production.

efforts that are an extension of existing measures whilst taking into account time horizons and efficacy. I believe this is

TOYO ENGINEERING CORPORATION

Integrated Report 202211

bring to bear its competitive advantage is to fully mobilize the

Nakaiwa In terms of what I expect from an engineering com-

TOYO can be like the conductor of an orchestra, leading thetechnology and accumulated knowledge at its disposal andpany like TOYO, I already mentioned the fact that it should be

relevant parties on a spirit of “we” not “I.” And now Professor

practically and effectively manage projects in order to achieve

well versed in a broad array of technologies, both old and new,

Nakaiwa’s comments about how we need to paint a bigger pic-

stated objectives.

Masaru Nakaiwa
Emeritus Researcher,
National Institute of Advanced Industrial Science and Technology

but another point I’d like to make, which applies to all otherture by skillfully incorporating existing technologies, not justThe very nature of the industrial structure is currently chang-engineering companies as well, is that project management

new ones, makes me realize once again that such high-caliber

ing from one that sought to achieve prosperity by consuming

skills of an even higher caliber than before are now being

project management capabilities are being demanded of us.

large amounts of energy to one that now seeks prosperity for

demanded by the market. Particularly in fields that are contrib-

as little energy consumption as possible. At the same time,uting to carbon neutrality, most of the projects are not being

Nakaiwa Japan’s vision for a carbon-neutral society by 2050

the number of problems being solved with the use of technol-

carried out by a single company, but by large-scale joint under-

calls for a power generation mix of 50%–60% from renew-

ogy continues to swell. That said, the most impressive typetakings in which a whole host of stakeholders come together

able energy sources such as solar, wind, hydro, geothermal,

of innovation for realizing an environmentally-friendly society

to build a value chain. One company needs to assume theand biomass, around 10% from hydrogen and fuel ammonia,

is the kind that sharply reduces energy use through a cleverextremely difficult role of facilitator for such large undertak-and 30%–40% from nuclear power and carbon capture-based

combination of existing technologies, instead of just innova-

ings, which is where I think an engineering company withthermal power generation. However, these are ultimately ref-tive technology developed from scratch. In that sense, I thinkknowledge and experience can seize the initiative.

erence values. Furthermore, electrification is advancing at a

the added value of an engineering company should rest on

The road to carbon neutrality is littered with uncertainties,

rapid rate and demand for electricity is expected to increase

its ability to be a good judge of technology and its capacity toincluding advancements in technology and changes in social

by 30%–40% by the year 2050. I think engineering compa-

social implementation, rather than the innovative qualities ofcircumstances. What is needed, therefore, is a project leader

nies will be expected to play the very important role of leading

the technology itself.

that can marshal all the other members of the consortium by

various projects to deploy as many different types of renew-

flexibly responding to project situations as a competent navi-able energy as possible and seize upon the many options

What impressed me the most about TOYO when we weredeveloping

gator on the assumption of various scenarios, such as futureavailable to contribute to carbon neutrality, including hydro-technological developments. For this reason, an engineering

gen, ammonia, CCUS*8, and carbon recycling.

the technology and its exceptional judgement. In its medi-company backed by a track record and boasting extensive*8 Carbon dioxide Capture, Utilization and Storage

an area in which the reasons for existence and differences inum-term management plan, TOYO aims to expand its non-technical knowledge fits the bill perfectly.

added value of engineering companies can come to the fore.

EPC businesses, but I think that wouldn’t be possible if it

Nagamatsu However, if we hastily go about building a carbon*6 Refers to mainly heavy and chemical industry sectors. Also includes iron and steel,cement, non-ferrous metal, shipbuilding, chemical engineering, and their related
process industries.

didn’t have a solid understanding of the technology underpin-

Nagamatsu Given the growing importance of technical knowl-

neutral value chain, sound economic reasoning stands in thening those businesses. I should also add that the Company’sedge, when I’m asked what TOYO can offer, one of my answers

way as a major barrier because the major premise of energy

superior judgment of technology has been honed from manyis always “project management grounded on technology.” In lastin the first place is stable supply and low costs. On this point,

Nagamatsu One of the fundamental roles of an engineering

years of experience in the plant engineering industry, which isyear’s integrated report, Professor Bunro Shiozawa—who has

we are very welcoming of the support the ¥2.0 trillion Green

company, which is neither a construction firm nor a manufac-

something it should probably take great advantage of.
Nagamatsu

work. For example, we are taking steps to combine the FTEngineering companies that quietly undertake EPC work

synthesis technology*7 of US-based Velocys Inc. with ourmerely in a coordinating capacity will struggle to stabilize

own technology in order to actually deploy in real-world set-earnings and grow in a sustained manner when the competi-tings the technology to produce SAF from woody biomasstion is fierce. We have always maintained a heightened sense

and CO2. Also, recently in Thailand we started developing theof crisis in this regard. Of course, we possess proprietary

technology to turn mixed waste plastic into petrochemicals,

technologies in certain fields, like urea for example, which inwhich is actually the initiative of a partner company to aug-

itself is one of our strengths, but unlike other companies thatment the scale of its pilot plant technology into a commercial

purely rely on research and development, we are in a posi-

operation. These initiatives can be given tangible shape andtion where various technologies intersect, so I think the fact

form because we have mastered the technology to do so, sothat we are capable of social implementation is our lifelinein that sense I believe we must further bolster and distinguishbecause we are not an engineering company that undertakes

ourselves as an engineering company founded on technology.

projects simply as a coordinator.

Thank you very much for your kind words.

TOYO possesses high-tech application capabilities to deploy social implementation
Deploying new technologies in society is one of TOYO’s missions
Basic
research/lab testing

Appliedresearch/
prototype

Volume production/social
implementation

Opening up value chains with partners based ontechnological development know-how cultivated in EPC and R&D• Uncovering issues• Supporting technological development• Trialing commercial scale designs• Planning pilot testing

Proprietary development technology
Solving social issues based on chemical engineering• Identifying issues with a view tosocial implementation• Creation of patented technology

Integrated Report 2022

Field testing/demonstration

Co-creation engineering*7 Fischer-Tropsch (FT) synthesis is a technology that synthesizes liquid hydrocarbon
from synthesis gas (gas mixture of CO and H2) with the use of catalysts.

TOYO ENGINEERING CORPORATION

Empirical
research/
pilot program• Development of basic
engineering specifications• Economic valuations andfeasibility studies

Data Section

and undertake project management to reliably execute EPC

Foundation for Sustainable Growth®, which President Nagamatsu

mentioned earlier, was the Company’s real understanding ofturing company, is to bring together elemental technologies

12

the practical application of fuel ammonia—said that he hopes

Medium-term Management Plan

1980	
Researcher, Chemical Technology Research Center, Agency of Industrial
Science and Technology, Ministry of International Trade and Industry
2001	
Head of Thermochemical Systems Group, Research Laboratory on
Environmentally-conscious Developments and Technologies, National
Institute of Advanced Industrial Science and Technology
2008	Head of Environmental Chemistry Research Institute, National Institute ofAdvanced Industrial Science and Technology
2012	Deputy Head of Department of Environment and Energy, National Institute ofAdvanced Industrial Science and Technology
2014	
Chief Researcher, New Energy and Industrial Technology Development
Organization2017	Director-General, Fukushima Renewable Energy Institute, National Instituteof Advanced Industrial Science and Technology
2021	Emeritus Researcher , National Institute of Advanced Industrial Science andTechnology
	Professor of Industry-Academia Collaboration, Research Institute of Yamagata
University
2022 Research Supervisor, Japan Science and Technology Agency

Management Vision

made significant progress on developing the technology behindthe most important thing an engineering company can do to

Expectations for high-caliber project
management know-how

Nakaiwa On the topic of project engineering, I certainly think• Commercialization demonstration• Establishment of societal value
chains• Demonstration of patented
technology• Industry-academia-government
collaboration
TOYO ENGINEERING CORPORATION

Integrated Report 2022

13

natural conditions, social constraints, and various other hur-pilot plant that uses ethanol derived from municipal waste.

and other stakeholders. I also think the expectations placeddles must be overcome in Japan and other countries that

Also, some chemical companies are looking to drasticallyon engineering companies is enormous because the GI Fundlack energy resources, as well as in emerging countries in

reduce CO2 emissions by using bio-naphtha as a feedstock

aims to support not just the development of technology, but

Asia primarily where demand for energy is expected to growin ethylene plants, which is a development we are keeping aalso social implementation.

stronger. I’d like to see TOYO bind together the cutting-edge

close eye on from the perspective of the circular economy*9.

technologies it developed in Japan with other global tech-*9 According to the website of Japan’s Ministry of the Environment, in addition to conventional “3R” efforts to reduce, reuse, and recycle, a circular economy aims to minimize the amount of resources used and consumed, to make effective use of existing
stock, and to facilitate economic activity that generates added value through services
and the like, which in turn maximizes the value of resources and products, minimizes
the consumption of resources, and reduces the volume of waste generated.

Nagamatsu While we continue to steadily secure projects

nologies to actively support effective decarbonization efforts

pertaining to mainly energy saving, we are also looking toaccording to the circumstances in each country.

enter a period of rapid progress on innovative carbon-neuNagamatsu We have group companies in India, China, South

Innovation Fund (GI Fund) that was set up at NEDO will con-mented earlier, we intend to produce results in succession

Korea, Indonesia, Malaysia, Brazil, and elsewhere and we

Nakaiwa As fiscal 2030 draws closer, heated debate willtinuously provide over a period of around 10 years to areas

during the period of the current medium-term management

have hitherto undertaken EPC projects in approximately 60

probably surface again with regard to the government’s mile-

where government policies will have the biggest impact with aplan. In particular, we recently formed an alliance with indus-

countries. Although Toyo-Japan has exported its know-how tostone target of a 46% reduction in greenhouse gas emis-

view to social implementation, or in other words, entry points

try peer JGC Holdings Corporation in the field of fuel ammo-

overseas markets, one of TOYO’s major strengths now is thesions and what action is required to achieve carbon neutrality

to commercialization. Particularly in energy-related industries,

nia plants. Accordingly, we intend to swiftly meet anticipatedcapacity of each group company with strong ties to the local

by 2050 in light of the actual transition to carbon neutral and

the GI Fund will focus on the priority growth fields of hydrogenglobal demand for fuel ammonia as a decarbonized fuel forcommunity to execute global operations.

advancements in technology. In recent times, the shift fromand fuel ammonia, offshore wind, solar, and geothermal, anduse in mainly power generation and shipping by combining

Particularly Toyo-India—which was established more thancoal-fired power generation to natural gas and renewables has

next-generation thermal energy. TOYO too hopes to actively

TOYO’s world-class track record of 86 ammonia production

40 years ago to fulfil an order for a fertilizer plant as TOYO’s firstbeen shrouded in uncertainty as a result of Russia’s invasion

participate in joint public-private sector projects in these fields.

plants and JGC’s extensive plant construction accomplish-

overseas project—has now grown into an engineering com-of Ukraine and there are mounting concerns that the decar-

ments at potential fuel ammonia plant construction sites

pany boasting foremost experience even by global standards.

bonization movement will lose traction. Despite the myriad of

Nakaiwa The GI Fund asks companies to commit to certain

in mainly the Middle East and Australia. Our respective

There is a healthy pipeline of projects in the Indian mar-uncertainties, I certainly hope to see TOYO remain fully atten-

goals as management issues so that projects can actually bestrengths in this Japanese alliance will enable us to deliver

ket, including oil refinery plants, LNG gasification facilities,

tive to decarbonization trends and take a leading role in deliv-

implemented in society instead of ending at the R&D stage.

sophisticated proposals and competitive advantages.

petrochemical plants, and specialty chemicals. Toyo-India isering solutions to the global issues of energy reduction andalso fielding more and more enquiries about projects related

carbon neutrality.

It is hoped that the ¥2.0 trillion fund will have a pump-primsome ¥15.0 trillion in the private sector. However, because
government support by way of the GI Fund is directed

Leading the worldwide decarbonization
movement by leveraging global
operational know-how

hydrogen/fuel ammonia. For example, we are currently han-Nagamatsu Thank you very much for your wide-ranging

dling the basic engineering of a pilot plant to synthesize

comments today. I get the feeling that the objectives of our

towards projects or teams instead of just one company, I think

Nakaiwa I think there will be a steady increase in enquiries

methanol from CO2 and hydrogen using TOYO’s proprietarymedium-term management plan have been given a fresh

strong project leaders are needed more than ever before toup ahead regarding decarbonization projects, even thoughg-Methanol® process. We have high hopes that this proj-

endorsement. TOYO’s ideal corporate vision is to be a global

ect can be expanded in the future to neighboring countries,

leading engineering partner and our corporate philosophy is toincluding markets in the Middle East and Africa.

become the most reliable partner for our customers by con-

Examples of joint public-private projects
Business

Partners

Feasibility study for green fuel ammonia production utilizing
existing fertilizer plants (Indonesia)

—

METI

Practical use of ammonia fuel in a naphtha cracker

Mitsui Chemicals, Inc., Maruzen Petrochemical Co.,
Ltd., Sojitz Machinery Corporation

NEDO

SAF pilot production by biomass gasification FT synthesis
and supply chain establishment

JERA Co., Inc., Mitsubishi Heavy Industries, Ltd.,
Itochu Corporation

NEDO

Regional CO2 resource utilization study of electrolysis using
artificial photosynthesis technology

Toshiba Energy Systems & Solutions Corporation,
Toshiba Corporation, Idemitsu Kosan Co., Ltd.,
Japan CCS Co., Ltd., All Nippon Airways Co., Ltd.

Ministry of theEnvironment

Feasibility study for electrification of ethylene cracker toreduce CO2 emissions to zero (Thailand)

—

NEDO

Study on technical development for designing an excavation
testing machine for cobalt-rich crust in connection with a
2021 study on ocean mineral resources—

JOGMEC*2

Building of dredging and pumping equipment for the recovery of rare-earth mud—

Cabinet Office SIP*3
JAMSTEC*4

TOYO ENGINEERING CORPORATION

Integrated Report 2022

NEDO*1

Nakaiwa India is the world’s third largest consumer of energyties, the ability to social implementation, project management

and there are indications that its primary energy consumption

skills, and global reach. Today, I certainly saw the significancewill rival that of the United States by 2040. However, someof this objective in a new light. Business is currently picking

70% of that consumption will likely by fossil-fuel based, suchup again in anticipation of an end to the COVID-19 pandemic

as oil and natural gas, so there appears to be considerable

and demand for oil refinery, fertilizer plants, and other facilities

demand for energy-saving projects, not just carbon neutrality.

in our existing business domains is recovering, but we also

Accordingly, having a local subsidiary with not only technolog-

intend to open up new business fields centering on carbon

ical expertise, but also the ability to tap market demand withneutrality and the circular economy, optimally fuse together

maneuverability and well-informed views of the local condi-

our blue and green strategies, and keep a tight rein on ourtions is a wonderful asset. Meanwhile, orders for biomass-fired

approach going forward. At the same time, the TOYO corpo-

power plants are also growing in Japan, aren’t they?

rate slogan of “Your Success, Our Pride” reflects our desire

Data Section

Mitsui & Co., Ltd.

*2 Japan Oil, Gas and Metals National Corporation*4 Japan Agency for Marine-Earth Science and Technology

stantly honing our strengths of high-tech application capabili-

Relevant agency

Implementation study for green ammonia production technology to deliver stable operations during times of volatility
in renewable energy output (Chile)*1 New Energy and Industrial Technology Development Organization*3 Cross-ministerial Strategic Innovation Promotion Program14

to carbon neutrality, such as CO2 recycling, bio ethanol, andFoundation for Sustainable Growth

ing effect and induce ambitious innovation investments worth

Medium-term Management Plan

tral initiatives targeting fiscal 2030. For some projects imple-

Management Vision

successfully forge relationships with government agencies

to hear our customers say they are glad they chose TOYO andNagamatsu Partly owing to the introduction of the feed-in

to be a company where employees find their work rewarding

tariff (FIT) system in Japan, we have taken orders for 12 bio-and can make their families proud. That is the kind of com-mass-fired power plants in total since 2017. We also com-pany we want to be.

pleted work for an order for a high-purity ethylene production

TOYO ENGINEERING CORPORATION

Integrated Report 2022

15

Message from the CFO
energy projects and pharmaceutical plants in Japan. We planand oil refinery in Brazil. There are many projects that are not

to increase orders for oil refinery and petrochemicals in India,

significantly affected by the Russia-Ukraine situation, and wefor petrochemicals and high performance chemicals in China,

expect to receive ¥300 billion in orders, including the ¥50 bil-where foreign companies have entered the market, for value

lion by our equity method affiliates, and plan to secure a stablechain projects related to gas-fired power generation, FPSO,

volume of orders for the second consecutive year.

Kensuke Waki(1) Attract a steady volume of orders andstrengthen profitabilityof the gross profit composition in fiscal 2021. The gross profit

Our fiscal 2021 financial results indicate that we are halfway

2025 target of 25%. Under the medium-term management

to achieving the KGIs for net income and ROE set in our medi-plan, we intend to allocate a portion of our revenue from exist-

um-term management plan. The main reason is the sluggish

ing businesses to investments in R&D and business develop-

order intake over the past two years. As such, attracting ament in new domains, including carbon neutrality, as well as

steady volume of orders will be key to achieving our KGIs.

to DXoT investments. We will seek to launch new businesses

For Fulfilling the Medium-term Management Plan

Director, Senior Executive Officer
Chief Financial Officer (CFO)

Fiscal 2021 Summary
We have set our annual orders estimate at around ¥300 bil-gish order volume in previous years attributed to factors suchlion based on a standard income and expenditure model. In fis-

as COVID-19, as well as by the Russia-Ukraine situation throughcal 2019 and fiscal 2020, however, orders grew at a sluggish

the end of the fiscal year. Despite this, net sales and operating

pace due to a combination of factors, including the global decline

income increased from the previous year and were positive forin investment demand for petrochemical plants and COVID-

the third consecutive year. Net sales was ¥202.9 billion, oper-

19. In fiscal 2021, investment plans for petrochemical plants

ating income ¥2.9 billion, and net income ¥1.6 billion. We haveresumed, and inquiries for biomass projects increased. Against

been meticulously managing project risks since launching thethis backdrop, we received orders in the amount of ¥274.4 bil-revitalization plan, and are no longer engaged in projects thatlion (¥290.4 billion including the orders of our equity method affil-

generate major losses. The gross profit margin exceeded theiates), exceeding ¥250 billion for the first time in three years. We

10% level following on from the previous fiscal year.

expect net sales to gradually pick up from fiscal 2022.

Gross Profit (¥ Billion)

294.9

219.0

202.9

210.0

18.5

20.8

21.5

1.8

2.9

1.6

2.0

(5.6)

2018

2019

2020

2021

2022

(Forecast)Ordinary Income (¥ Billion)

(FY)

2018

3.1
2.4

2.7

2019

2020

2021

2022

(Forecast)

(FY)

1.6

1.6

2018

2019

2018

2019

298.0

2.5

2021

2022

(Forecast)

(FY)

2018

2021

274.4

1.5

2022

(Forecast)

250.0

187.0

0.8

2020

2020

New Orders (¥ Billion)

122.8

(0.8)

(FY)

2019

2020

2021

2022

(Forecast)

(FY)

2018

2019

2020

2021

2022

(Forecast)

The business environment is complicated by uncertainties.

opportunities for non-EPC project orders including orders for

As the person responsible for finance and accounting, I will do

low risk solution services. Furthermore, we will leverage DXoT

my part to fulfill the medium-term management plan. On theand Group operations to improve our price competitiveness andmacro level, I will focus on stabilizing the revenue of existing

EPC execution capabilities, aiming for appropriate increases inbusinesses and establishing new business areas by optimizing

the volume of orders and the gross profit margin on orders.

the Group’s fixed costs and taxes, managing the portfolio of

The Group will not only work alone in attracting a steadybusiness revenue, securing and allocating human resources,

volume of orders. For each plant product, we will also workand allocating funds. On the micro level, I will screen indi-

in alliance with a variety of companies, such as Nippon Steelvidual orders and investment projects and manage project

Engineering, Taisei, JGC, and MODEC, to ensure a continuous

account risks from a finance and accounting perspective.

contribution of increased orders in fiscal 2021 to net sales is

Ukraine situation. Soaring material and equipment costs andexpected to fully manifest itself in fiscal 2023 and beyond.

transportation costs, supply chain delays, and exchange rate

Although we have a contract backlog of approximately ¥30 bil-fluctuations are anticipated to affect the progress of newlion for two petrochemical projects underway in Russia, ourorders and existing projects, and we are taking measures byoutlook does not include the revenues from these projects,

diversifying procurement sources and coordinating contract

taking into account the situation in Russia. We expect thatterms with clients.

investments in DXoT and business development will be about

Considering these uncertainties, we forecast that theCompany’s gross profit, operating income, and net income(3) Capital adequacy and resumption of dividend
payments(2) Plant seeds for the future and acceleratemonetization

Although the Company is no longer engaged in past unprof-

Investments and operating costs for DXoT and ICT are

while longer before we can resume dividend payments. The

expected to amount to ¥4–7 billion each fiscal year from fiscal

Company has not paid dividends for five consecutive fiscal

2021 onwards, and are projected to total ¥28 billion over theyears to the present, and we sincerely apologize to our share-

five-year period up to and including fiscal 2025, the final fiscal

holders. Our immediate priority is to raise our consolidated

year of the medium-term management plan. We expect that

equity ratio, which was 18.4% in the end of fiscal 2021, to atthese investments and operating costs will advance our main-

least the 25% level and increase equity capital to the ¥60–70

stay EPC business and gradually contribute to our profit. To

billion range or higher. We intend to remain on track to realiz-

expand our business in new domains, we also plan to invest

ing this goal and resume dividend payments as early as pos-

¥8 billion over five years in R&D and business development.

sible during the medium-term management plan. We ask foritable projects, we still need to accumulate profits for a

the continued understanding and support of our stakeholders.

the same as those in the previous fiscal year.
By priority region, we aim to increase orders for renewable

KGI
Consolidated Net Income (¥ Billion)

10.0

Consolidated Net Sales (¥ Billion)
300.0

ROE (%)

Data Section

will be on a par with those in the previous fiscal year. The

impacts of the COVID-19 pandemic and the prolonged Russia-

Integrated Report 2022

the gross profit margin on contracted projects, and increasebusinesses, with non-EPC projects already making up 39%

We will need to closely monitor the business environment

TOYO ENGINEERING CORPORATION

overall revenue of our businesses.

We are making steady progress in transitioning to non-EPC

Fiscal 2022 Outlook

16

ous cycle between existing and new businesses to grow thefore conduct thorough risk screening of proposals, focus ontechnical expertise, and regional insight.

Profit Attributable to Owners of Parent (¥ Billion)

3.4

and make them profitable at an early stage and create a virtu-

with increasing EPC project orders haphazardly. We will there-

order intake while complementing each other’s resources,

10.6

(FY)

However, we do not want to repeat our bitter experience

Foundation for Sustainable Growth

184.0

18.7

Operating Income (¥ Billion)

composition of new businesses is 18% compared to our fiscal

Medium-term Management Plan

Consolidated results in fiscal 2021 were affected by the slug-

Net Sales (¥ Billion)

Management Vision

To achieve sustainable growth of TOYO,I as the CFO will thoroughly screen proposals
and manage project accounts from a financeand accounting perspective, and contribute tofulfilling the medium-term management plan.

10

202.9
5.0
3.8
1.6
(FY)

2021

(Actual)2025（Target）

2030（Target）

(FY)

2021

(Actual)

Guideline

(FY)

2021

(Actual)2025

onwards (Target)

TOYO ENGINEERING CORPORATION

Integrated Report 2022

17

Financial and Non-Financial Highlights
Please go to the ESG Highlights on P.60-61 and Financial Highlights on P.62-63 for more information.

Management Vision

Financial Highlights
Net Sales, Gross Profit Margin, andOperating Income Margin(¥ Billion)

(%)

400

12

200

6

0

0

-200

-6

Operating Income, Ordinary Income, andProfit Attributable to Owners of Parent

Total Assets, Total net Assets, and Equity Ratio(¥ Billion)(¥ Billion)(%)(¥ Billion)

(%)

400

20

60

15

300

15

40

10

200

10

20

5

100

5

0

5

Equity, Return On Equity (ROE)

0

-5

-12
(FY)

2017

2018

2019

2020

Gross profit margin (right scale)Net sales (left scale)

-40

0

2021

Operating income margin (right scale)

(FY)

2017

2018

Operating income

2019

2020

0

2021

(FY)

Ordinary income

2017

2018

Total assets (left scale)Profit attributable to owners of parent

2019

2020

-20

2021

Total net assets (left scale)

-5

2017

(FY)

Medium-term Management Plan

-400

0
ROE
-70.3

Equity (left scale)

2018

2019

2020

2021

Return On Equity (ROE) (right scale)

Equity ratio (right scale)

Net Sales by Region

Net Sales by Product

Cash Flows

Interest Bearing Debt, Debt Equity Ratio(¥ Billion)(¥ Billion)(¥ Billion)(¥ Billion)

400

400

20

40

2.0

300

300

30

1.5

200

200

20

1.0

10

0.5

10
0
-10
-20

0

0
(FY)

Japan

2017

2018

Southeast Asia, Korea

Russia and Central Asia

2019

2020

2021

Southwest Asia, Middle East and Africa

North America

Central and South America

China

-30
(FY)

2017

Petrochemicals

2018
Oil & Gas

Chemicals/Fertilizers

2019

2020

(FY)

2017

2018

Operating activities CF

Power/Railways etc.

Pharmaceuticals etc.

0

2021

Others

2020

2021

0
(FY)

Investing activities CF

2017

2018

2019

2020

2021

Interest bearing debt balance (left scale)
Debt equity ratio (right scale)

Net increase/decrease in cash

Financing activities CF

Others2019

Foundation for Sustainable Growth

100

100

Free cash flows

Non-Financial Highlights
New Orders, Backlog of Contracts

Backlog of Contracts, Renewable-Energy Contract
Backlog Ratio(¥ Billion)(¥ Billion)

(%)

500

500

50

400

400

40

No. of employees (consolidated)

300

30

200

200

20

100

100

10

0

0
(FY)

2017

New orders

2018

2019

Backlog of contracts

2020

2021

0
(FY)

2017

2018

2019

2020

Backlog of contracts (left scale)
Renewable-energy contract backlog ratio (right scale)2021

No. in managerial roles (consolidated)(People)(%)(People)(%)(People)

(%)

7,000

21

4,000

12

1,200

6

6,000

18

9

5

15

3,000

1,000

5,000

800

4

4,000

12

3,000

9

2,000

6

600

3

2,000

6

1,000

3

400

2

1,000

3

200

1

0

(FY)

0

2017

2018

Male (left scale)

2019

2020

2021

Female (left scale)

Percentage of female (right scale)

0

0
(FY)

2017

2018

Male (left scale)

2019

2020

2021

Female (left scale)

Percentage of female (right scale)

0

0
(FY)

Data Section

300

No. of engineers (consolidated)

2017

2018

Male (left scale)

2019

2020

2021

Female (left scale)

Percentage of female (right scale)Note: Total of major EPC companies including equity method companies. Excludes temporary employees.

18

TOYO ENGINEERING CORPORATION

Integrated Report 2022

TOYO ENGINEERING CORPORATION

Integrated Report 2022

19

Outline of Medium-term Management Plan (FY2021–
FY2025)In this Medium-term Management Plan, the first year of which was fiscal 2021, TOYO clarified an approach so that it cancontribute to “achieving a sustainable, better world,” a common issue for all humanity, and compiled them into a growthstrategy. By moving forward with the strategy indicated here, TOYO will contribute to creating a society that balances“harmony with the environment” and “economy and convenience” while aiming to achieve TOYO’s further growth.
New Knowledge and Business Opportunities
returned to EPC

Group operations

Priority Areas: Environment and Energy
Co-creation with clients/partners fromthe concept

DXoT (Digitalization without sanctuary)
Ensuring Excellent Quality andProfitability

Invest knowledge, experience and benefits
gained through EPC“Sustainable Technology andBusiness Development” (green strategy)
Develop the following five priority businessfields using CCUS knowledge and experienceand synthesis gas technology as core

Target3.8%

Dividends• Aim to resume dividend payments during
period of plan—

We will make new business areas and business models more
profitable, further invest to them and improve employees’ treatment.
FY2026-2030: Leap forward

TOYO ENGINEERING CORPORATION

Integrated Report 2022

2025

• FY2025: 25% or higher• FY2030: 50%

Gross profit composition(6 main Group companies)• FY2025: 45% or higher*2• FY2030: 50%

Employee’s satisfaction• Improved from the previous
year levelNo. of employees

non-EPC

Sustainable Tech. andBusiness Development

2030

New
business
areas

EPC

Advanced
EPC Operation

39%
18%
57%
3.63 on a 5-point scale(3.37 previously)

Japan: Double number engaged insustainable technology and business development

About 100 now(slight increase)

Other Group companies: Increase/decrease according to demand

Maintain group-wide size of

5,500*1 Non-EPC = non-EPC/EP Lump Sum projects*2 TSPI (Brazil) is not included as an equity method affiliate

Consolidated
net income (¥ Billion)

Consolidated
net sales (¥ Billion)

ROE (%)

Non-EPC gross profit
composition (%)
EPC

Non-EPC

10.0

10

300.0

New business areas
gross profit composition (%)

Group companies grossprofit composition (%)

New Business area

Group companies

Existing Business area

Toyo-Japan
*3

39

18

25

25

50

202.9

45

50

57

50

5.0

2025
Target2030
Target2021

Guideline
(FY)

82

75

2021

2025
Target
(FY)

2021

50

2025
Target(FY)

2030
Target

55

75
50

2021

2025
Target

50

43

2030
Target

2021

(FY)

2025
Target2030
Target(FY)*3 TSPI (Brazil) is not included as an equity method affiliate

Fiscal 2021 review

Future priority measures(1) Moved forward with strengthening the group’s operation capabilities and risk management for group companies’ independent projects(2) Non-EPC gross profit accounted for 39% of total grossprofit, surpassing medium-term management plan target(3) Group company gross profit accounted for 57% of total
gross profit, surpassing medium-term management
plan target(4) Fruits of co-creation with partners• Joint order for a biomass power plant with Nippon
Steel Engineering Co., Ltd.
• Order for biopharmaceutical plant facilities with Taisei
Corporation(5) Moved forward with various initiatives in new businessfields, particular those related to carbon neutrality(6) Achieved 20% progress of increasing productivity sixfold through DXoT
(7) Established Sustainability Committee(1) Focus on growth markets whereTOYO has a group company
India, China, Brazil(2) Further evolve group operations
Transform Toyo-India into the core of EPC operations forall of TOYO
(3) Promote carbon neutral business• Realize projects, centered on Carbon Neutral Business
Division, which was upgraded from the former strategy team• Participate in building value chain addition to winningorders for EPC projects(4) Further raise productivity by moving forward with DXoTbased work improvements, system development, andapplication to projects(5) Undertake TCFD*4-based disclosure and move forwardwith efforts so TOYO becomes carbon neutral by 2050

Data Section

Gross profit

New business area EPC

Existing business area EPC

20“Sustainability” ofthe businessNew business area Non-EPC

2022

Gross profit composition(new business areas)

1.6

Existing business area non-EPC

2020• FY2025: 25% or higher• FY2030: 50%

61“Certainty” ofthe business

FY2021Gross profit composition(non-EPC*1 businesses)

3.8

In the recovery phase of the post-COVID-19 market, we will earn profits from
EPC through enhanced risk management and invest in DXoT and R&D from the profits.

Penetration phase

202.9 billion¥

ROE• FY2025: 10% or higher• Thereafter: Stably 10% or higher(FY)

Evolution phase

1.6 billion¥

Consolidated net sales• Emphasis on profit over net sales• Net sales target: ¥300 billion(1) For existing fields, have the group company rooted
in the local community take the lead in executing
this by leveraging the EPC execution capabilities
they have developed since the 1960s(2) Improve productivity and quality through DX

Targets: Average net income of ¥5 billion or higher (FY2023–2025) andROE of 10% or higher (FY2025)

FY2023-2025

TargetFY2021

Consolidated net income attributable toowners of the parent• FY2023–2025 average: ¥5 billion or higher• FY2030: ¥10 billion

2021

FY2021-2022

KPI (Key Performance Indicator)

KGI (Key Goal Indicator)

Foundation for Sustainable Growth(1) Circulating and Low environmental impact(2) CO2 utilization, Energy conservation(3) Next generation energy(4) Resource and energy security(5) Quality of Life (Pharmaceuticals and high performance chemicals)“Advanced EPC Operation”(blue strategy)

KGI and KPI

Medium-term Management Plan

Strategy “Sustainable
Technology and Business
Development”

Strategy “Advanced EPC
Operation”

Management Vision

Making progress through double spiral strategies of“Sustainable Technology and Business Development” and“Advanced EPC Operation”*4 Task Force on Climate-related Financial Disclosures

TOYO ENGINEERING CORPORATION

Integrated Report 2022

21

Market Environment and Priority Measures
By Business Field
Evolution phase

New business fields

Next-generation energy•Announcement by various companies of plans for blue/green hydrogen/ammonia plants in the Americas,
Australia, Middle East, North Africa,and Southeast Asia, and expected
acceleration of this trend considering
demand projections through 2050

• PET bottle recycling plant• Fuel ammonia study work
• Advanced polymer/resin plant• Cobalt-rich ferromanganese crustdevelopment study work
• Application of plant operating support service DXPLANT® to ethylene
plants

Quality of Life•
Rapid increase in demand foradvanced chemicals, specialty chemicals, pharmaceuticals and fine chemicals in the fields of life and healthcare,semiconductors, mobility, etc.

Existing business fields

Petrochemicals•
Numerous large-scale projects in
India, China, Indonesia, Middle East,and North America• Cooperate with clients and partners, provide leadership for building value
chain, and construct a business model that goes beyond traditional EPC• Prepare for and develop projects for utilization of CO2, such as g-Methanol®,and circulating and low-environmental-impact projects, including those thatmake ethylene and polymer from Bio-Ethanol

New businessarea Non-EPC• Reinforce consulting services and expand customers through TOYO’s proprietary energy-saving and GHG-reduction technology and leading technology.

New businessarea EPC

Existing business fields

Newbusinessareas• A fertilizer (ammonia) project in India• FPSO module, gas-fired power plant,
power line project through a Brazilian
equity-method affiliate• Launched commissioning and commercial operation of fertilizer plantin Nigeria in the shortest time in theworld• Increase certainty of orders through efforts such as improving accuracy of
estimates and proposal method• Increase gross profit margin through appropriate project management bymaking project execution visible and further raising quality throughout the
TOYO Group, building a total risk management system, which includes forgroup companies, and moving forward with various DX measures• Deepen group operations by expanding cooperation among group companies and having group companies respond to local needs

Existing businessarea EPC

Company-wide•
Realized real-time management of
EPC progress whenever, whereverthrough the development of the
Project Twin*1

Nuclear power• In Japan, expected increase in opportunities to introduce technologies
and know-how from countries withdecommissioned reactors as therelated market is sure to increase formany years•
Recruit human resources who can
immediately contribute by forming atask force to improve human resources

Foundation for Sustainable Growth

Renewable energy•For biomass power plant, promising market for conversion of industrial coal boilers and Southeast Asia
market during movement toward
decarbonization• Participate in fuel ammonia FS/FEED/EPC/business in North America, SouthAmerica, Australia, Middle East, and Southeast Asia

• FEED work for large-scale petrochemical projects in Indonesia and China

Existing business fields

Oil & Gas, FPSO•Increase in investment in substitutes for Russian oil and gas andgreater investment desire among
oil producing countries due to highcrude oil price•
S trong demand for FPSOs overthe next 5–10 years, particularly inCentral and South America

Existing businessarea non-EPC• Strengthen sales and proposal activities to build a nuclear decommissioning business•
Received orders for five biomass
power plants for a total of twelve
since 2018

Power generation•E xpected continuing need forenvironment-friendly gas-fired power
plant particularly in Southeast Asia andBrazil, as a base-load power source

New business fields•Formulate optimization plan for hydrogen/ammonia receiving terminals
throughout Japan transforming it into a businessResource and energy security•Continued development of marine
mineral resources, including methane
hydrate, rare earth metals, cobalt-richferromanganese crusts, and manganese nodules

Fertilizers (ammonia/urea)• Firm growth in demand as the population grows and expected greater
investment in substitutes for
Russian fertilizers

non-EPC

Medium-term Management Plan

CO2 utilization, Energy conservation• For CO2 value chain, increase in inquiries regarding g-Methanol® in Japanand overseas (Southeast Asia), andfor CCS, increase in inquiries amidst
a trend toward both expanding business through hubs and clusters andreducing costs

Future strategy and priority measures

Orders and main topics

New business fields

Leap forward
Management Vision

Fiscal 2021 review

Market environment and outlook

Circulating and low environmental
impact•
Increase in number of inquiries
regarding introducing energy-saving
technology into existing plants, making existing plants green, and constructing new recycling plants

Penetration phase

EPC

Company-wide• Ensure the Medium-term Management Plan is implemented by continuing
to expand project and proposal human resources and securing experts innew business fields, including carbon neutrality*1 System that makes it possible to ascertain thestate of projects in real time

2020

2022

2025

2030
Data Section

SWOT analysis

S

Strengths22• High-tech application capabilities and project execution capabilities backed by experience in the fields ofammonia, ethylene, and polymers• Project execution capabilities of independent groupcompanies in India, Indonesia, China, Brazil, andother countries

TOYO ENGINEERING CORPORATION

Integrated Report 2022W

Weaknesses• Expanding business in countries other than thosethat TOYO has a group company in• Securing sufficient human resources

O

Opportunities• Global trend toward achieving SDGs and carbon
neutrality• Growing demand for renewable energy and newenergy (hydrogen/ammonia)

T

Threats• Rising prices and delayed delivery for any of various reasons, including the Ukraine crisis or
increase in post-COVID projects• Threat of entry of EPC contractors from emerging countries

TOYO ENGINEERING CORPORATION

Integrated Report 2022

23

Strategy “Sustainable Technology and Business Development”

Promoting Sustainable Technology and Business
Development Strategy
Management Vision

Balancing environmental and economic considerations throughtechnology and business development
Carbon Neutral Business Division established to provide leadership both inside andoutside the company and promote business development
and generate profits. In addition, in line with the trend

achieve a carbon neutral society ((1) fuel ammonia, NH3),

among clients and partner companies to merge carbon(2) SAF (sustainable aviation fuel), and (3) CO2 value chain),neutrality–related divisions, TOYO established the Carbon

we are taking on the challenge of tackling the social issue

Neutral Business Division in April 2022 by integrating relatedof balancing environmental and economic considerations,divisions to serve as the face of TOYO and offer quick andand it will be necessary to marshal the knowledge that indi-smooth communication, not having the each division respon-vidual in-house divisions possess by overcoming barriers

sible for a particular business or project handle the response.

between those divisions to achieve social implementation

TOYO’s priority business fields to achieve carbon neutrality

Chemicals

1

Resources4
3

2

Technology 5

Chemicals

Resources(NH3 synthesis)(CO2-EOR)

2

ChemicalsElectric power(NH3 synthesis)(renewable energy)

3Electric power

Resources(renewable energy)

(CCU)

Blue
ammoniaGreenammonia
CO2 electrolysis/
synthesis gas

4

Value chain construction (generate, transport, use)
[Carbon Neutral Business Division ]5

Co-creation engineering (social implementation of technology)[Next-G Technology & Application Division]

Promoting commercialization through technology development frompoints to lines and then from lines to surfaces
Connecting the technologies (points) that TOYO possesses and is developing and those possessed by partners (startup companies, producers, trading companies, etc.) to form a business chain (lines/surfaces), we stress the connection between technology and business and aim to increase the efficiency of return on development.

CO2 value chain

SAF

24

BiojetSAF
FT synthesis

CO2 reduction
SAF
FT synthesis

Haber–Boschprocess
Ammonia

RenewableenergyResponse tochangesEngineering

CO2
Methanolg-Methanol®

Low-pressure
synthesis
methodAmmonia

e-FuelGreen urea
g-UreaTOYO ENGINEERING CORPORATION

Integrated Report 2022

Fuel ammonia

Fuel ammonia

Ammonia
cracking

HydrogenPetrochemical
decarbonization business

Combustammonia
in cracking
furnace

Waste plasticliquefaction

Azusa Okazaki

Koji Kanamaru

Business Producer
Carbon Neutral Business Division
Plant Solution Business Unit

Research Engineer
Next-G Technology & Application
Division (T-Next)
Engineering and Technology Unit

Business Producer
Carbon Neutral Business Division
Plant Solution Business Unit

Three main initiatives
Fuel ammonia

Aim for earnings from EPC in 2024 and business investment returnin 2027

Fiscal 2022 priority measures• Create/stimulate demand for fuel ammonia• Optimize partnering and portfolio
With blue ammonia, it is possible to reduce carbon emissions by collecting and storing CO2 emitted during the process of synthesizing ammonia from natural gas, and because
the required elemental technologies have already been commercialized, blue ammonia can be adopted in society relatively
quickly and at lower cost compared to green ammonia or otheritems. Discussions regarding the definition of blue (CO2 recovery volume/percent) and policy issues such as a fuel price index(whether it is possible to have different prices for the samechemical, etc.) are moving forward, and it is expected that oncethe policies are set, movement toward final investment decisions (FID) regarding projects under development throughout
the world will accelerated. Back calculating from fuel ammonia

SAF

Aiming for business investments and EPC orders by 2025

Fiscal 2022 priority measures• Strengthen relationship with partner companies• Move forward with development and initiatives related toprojects that can quickly be undertaken• Undertake branding and develop partners
As for SAF, last year, we worked with partners to research anddevelop SAF manufacturing technology that melds wood biomass
gasification technology and FT synthesis technology as phase
1 of the New Energy and Industrial Technology Development
Organization (NEDO) demonstration project, and on June 17, 2021,
Japan’s first commercial flight using this fuel took place between

CO2 value chain

import targets for 2030 touted by various countries, it appears
that EPC work will start by around 2024, construction will take3-4 years, and commercial operation will commence in the second half of the 2020s.
On the other hand, for green ammonia, because hydrogen is produced using a water electrolyzer powered by renewable energy, there are several economic issues that need to besolved, and these include (1) reducing electricity costs (renewable energy costs), which account for about 70% of costs, (2)building a large-scale water electrolyzer (space per cost), and (3)adapting the ammonia synthesis process to changes in renewable energy. As for social implementation, it appears that smallto medium-scale projects based on local production and local
consumption will start from the second half of the 2020s, andlarge-scale projects that make full use of green ammonia as afuel may be economically viable before and after 2030.

Haneda and New Chitose airports. We are now moving forwardwith phase 2 with a partner to commercialize the technology. By
using the technology gained from experience in phase 1 and overcoming business issues, we are aiming to make business investments and launch EPC work by 2025, and then commercialize andrecover investment in the second half of the 2020s. Furthermore, interms of technology, we are working with partners on researchingand developing CO2 electrolysis and FT synthesis (Power to Liquid),
next generation technology to follow gasification and FT synthesis.
In preparation for the coming SAF market expansion, we are also
working so that we can handle any of several technical scenarios.

Focus on gaining experience with CCU and aim to quickly participate
in CCS business

Fiscal 2022 priority measures• CCU: quickly build experience• CCS: formulate a strategy for building new development/
advanced projects
The CO2 value chain business consists of carbon dioxide capture and utilization (CCU) and carbon dioxide capture and storage (CCS), and we are aiming to generate profit using CO2 as aresource. To achieve that, it is necessary to create a system forcarbon pricing (carbon tax, incentives, etc.) in each country andfor the whole world, and the development of a large number of
CO2 value chain projects by companies throughout the world is
progressing quicker than initially expected.
TOYO’s CCU business is centered on its proprietary technology

g-Methanol®. In addition to winning an order for pilot plant facilities in India last year, we have received numerous other inquiries. Having acquired experience with demo plants and working
with clients and partners, we are aiming to be involved in various
ways, from commercialization to project participation and EPC,
while keeping an eye on the relevant government’s policy trends
and when related markets in these countries will fully launch. As
for CCS, large-scale commercial projects are ongoing mainly inEurope, the US by several companies. We are aiming to participate in business as a joint partner with our strengths related tovarious aspects including owner’s engineering and project management by utilizing the CCS/CO2-EOR technology, knowledge,
and experience that we have gained since the 1980s.

TOYO ENGINEERING CORPORATION

Integrated Report 2022

Data Section

RenewableenergyHydrogen use
Process
technology

Green urea
technology

Minami Hayashi

Research Engineer
Next-G Technology & Application
Division (T-Next)
Engineering and Technology Unit

Foundation for Sustainable Growth

Electric
power

1

Satoshi Okajima

Medium-term Management Plan

In the three business fields that TOYO is focusing on to25

Strategy “Sustainable Technology and Business Development”

ATB’s Challenge—Solving social problems using
technology developed for chemical engineering

Plant Solution Business Unit
Advanced Technology Business Department

Management Vision

Advanced Technology Business (ATB) Department’s mission
To solve social problems and secure stable profits, TOYO will create new non-EPC business by developing universal technology that can be used in a wide range of fields and obtain related patents.

ATB’s priority business fields
Prioritybusiness
fieldsEnergy saving

Energy creation

1 HERO/

3 Redox flow batteries

Use patented technology to safely separate mixed hydrogen/oxygen gas
obtained through water electrolysis
that uses photocatalyst and offer a stable supply of CO2-free hydrogen

Batteries that offer a stable supply ofelectricity generated with renewableenergyServices and energy-efficient distillation system to save energy and reduce
GHG*1 emissions for overall processes
and utilities*2

H2: hydrogen, O2: oxygen, N2: nitrogen

Reduce GHG
emissions

Use
green
hydrogen

Sunlight

Scope of HERO optimization
Scope of optimization
using traditional methods

Danger of
explosion

H2

H2

H2

Oil refinery/ Petrochemical plants
Reducefuel use

Progress

AC-DC converter
Cell stack

DiluteWater
with airelectrolysis using TOYO
photocatalyst
patentedToyamatechnology
university
technology

O2

Electrolyte
tank

Use
pure oxygen
O2

Diaphragm

Pump

Electrolyte
tank

Pump

• Proposal of modifications in line with customer
demands after combining a large number ofoperating/design requirements and constraints• Electrification of energy sources and dramatic
reduction in energy consumption in the distillation process• Highly efficient because a wide range of wave
lengths of sunlight can be used
• Avoid risk of explosion and make safe production possible• Long life with outstanding lifecycle costs• Little risk of fire
• Compatible with photovoltaic power plant• Structure similar to plant

HERO• Check compatibility between partner’s photocatalyst and TOYO patent• Verification of patent technology with benchscale equipment• Received consulting orders for major petrochemical companies in Southeast Asia
• Developed simple computational algorithm• Generated HERO/SH sales promotion synergies®(SH)• Certified advanced facilities/systems within
SII subsidies*3• Concluded sales promotion and EPC partnership agreements for European market

Futurepriority
initiatives(1) Increase the number of clients by expanding
target applications and conducting simplified
examinations based on continuing technology
development(2) Develop European market jointly with sales
promotion partners(1) Verify patented technology using bench scaleequipment(2) Expand development consortium(1) Establish production method for mass
production(2) Form development consortium to verify performance using pilot equipment*4

HERO/

26

®

File for patent and confirm technical principles

Improve catalyst performance

Redox flow batteries

File for patent and conduct verification test

TOYO ENGINEERING CORPORATION

Integrated Report 2022

2022

2023

2024

2025

2026~

2030~

Commercialization and sales promotion activities

Manufacture hydrogenusing artificial
photosynthesis®

Non-EPC business models, such as licensing
sales and performance fee

Verify using bench scale equipment

Form/expand development consortium

Check manufacturing method
Form development consortium

Commercializationand sales
promotion
activities

Verify using pilot equipment

Verify using pilot equipment

Commercialization and sales promotion activities

Tatsuya Fukuda

Hiroshi Takase

Chief of R&D

Chief of HEROof the technology and ascertain what aspect of technology development focus should be placed on in order to commercialize it.

Wakabayashi Although our business is centered on EPC, TOYO

Fukuda For example, in response to the issue of safely split-

has formulated a strategy to expand its non-EPC business thatting hydrogen when manufacturing hydrogen using artificial pho-appears in the current Medium-term Management Plan.

tosynthesis, we are examining applying air separation technology

Takase HERO/® is truly a leading example ofthat is widely used in existing industries. When we find industries

that. With HERO, we ascertain the possibility of reducing energythat possess air separation devices and that are highly compatible

use and GHG emissions through plant modifications based onwith TOYO’s technology, and select technology to apply, I feel that

consulting regarding minimizing costs. The business model

we fully demonstrate the knowledge as an engineering company.

is based on earning a set percentage of actual reduced oper-

Wakabayashi Focusing on the business fields of (1) energy sav-ating costs as a performance fee for a set period of time. We

ing, (2) energy creation, and (3) energy storage, we are moving®, a distillation system that canforward with three initiatives in areas that we can offer solutions

be expected to dramatically save energy and reduce GHG emis-

to problems by leveraging the chemical engineering knowledge

sions, as a key technology, and this, too, is part of our licensingthat we are good at and obtaining patents.

also propose

business, not EPC.

Fukuda This department is unique in that it commercializes tech-

Fukuda We are currently in the process of developing the tech-

nology developed by itself and handles all aspects, including thenology to manufacture hydrogen using artificial photosynthesis,

business model, sales promotion strategy, sales, and executing

and our goal is to develop a related licensing business and hydro-

projects. Therefore, I feel that we are able to efficiently move for-gen sales business as non-EPC business in the future. Having

ward with examinations that extend to adoption in society because

filed patents for proprietary technologies effective for safely split-

we have our eye on the exit—that is, commercialization—andting hydrogen, which used to be an issue for hydrogen produced

search and develop ideas that could become new technologies.

using artificial photosynthesis, we are building a safe and effec-

Takase For example, many engineers move forward with develop-

tive process that makes use of this technology.

ing technology based on the idea of increasing efficiency from 20%

Wakabayashi We are also currently developing the technology

to 50%. The problem with that method, however, is that it takes time

for redox flow batteries, but because it is a system with a struc-and money. We think about things by back calculating from the goalture similar to a plant, we will make use of the knowledge andof commercialization; therefore, we are happy with 20% efficiency

experience we have gained in the technology development. For

and focus on other aspects, and this approach leads to patents.

this, in addition to licensing sales, we are considering various pos-

Otomo

ity using storage batteries.

TOYO’s innovative energy-saving distillation system® was developed with consecutive processes

and normal and pressurized systems in mind, but when talking withvarious clients, I learned that there was a need for non-consecutive

Developing technology with an eye towardcommercialization

processes and reduced pressure systems, and we made improve-

Wakabayashi Under the belief that the value TOYO provides

nimble we are—that is, we immediately respond to client feedbacklies in solving social problems based on unique patentable tech-through technology development.

ments each time. Another distinguishing aspect of TOYO is how

nology, the department that was the predecessor of ATB was

Wakabayashi We are very particular about moving forward withlaunched in 2019 and moved forward with technology develop-

technology development with an eye toward commercialization,

ment and new business construction.

being attached to our own technology, and persisting until we

Takase TOYO’s strength is that as an engineering company, we

commercialize an idea. To become carbon neutral, an issue forcan propose technology-based solutions because we possess vari-society, we want to offer clients our technology and generate

ous processes and plant know-how. We are able to get an overview

results, which means we earn fair profits.

TOYO ENGINEERING CORPORATION

Integrated Report 2022

Data Section

Roadmap to Commercialization
2021

Chief ofsibilities, including investing in business entities that sell electric-*1 Greenhouse gas *2 Water, steam, electricity, etc. *3 Advanced Energy Saving Investment Promotion Support Program being undertaken by the Sustainable open Innovation Initiative*4 Test equipment for semi-commercial plant scale

2020

Yohei Otomo

General Manager

Foundation for Sustainable Growth

Merits

N2 Separate
using airseparation unit

ChargeElectrode

Generate electricity/
Steam, etc.

Discharge

Electrode

Manufacturingchemicals

Proprietary
technologies

N2

O2

Electricity
consumers

Power plants

Toshihiro Wakabayashi

Medium-term Management Plan

2 Manufacture hydrogen using
artificial photosynthesis®

Energy storage

27

Strategy “Advanced EPC Operation”

management methods. Many of those engineers are now

becoming larger and more complex. Collaboration with TOYO

contributing as Toyo-India managers, and TOYO standards,

group companies has raised the project execution capabilities

which were imprinted in them like DNA, are the foundation ofof the whole group.

Toyo-India’s competitiveness.

Management Vision

India

Having accumulated experience with plant projects of vari-

In 2021, a DXoT support team and Construction Planningous sizes and types over its 45-year history, Toyo-India aims toCenter were launched to increase work efficiency andexpand its business to fields such as chemicals and specialty

strengthen construction execution capabilities through work

chemicals while maintaining its core business in the gas andinnovation and digitalization, which in recent years have grown

petrochemical industries as demand is projected to increase

more important to ensure the execution of projects that are

as India’s population grows.

Potential of the carbon neutrality field and Toyo-India’s initiatives
be expected that there will be several large-scale projects(COP 26) held in November 2021, the Indian government

related to green ammonia for both domestic use and export,

announced that it aims to become carbon neutral by 2070,

and there are high hopes for this as it is a field that makes

India boasts a population of about 1.4 billion people, the second

trade deficit. In 2020, the government also formulated its

and in response, a number of major state-owned enterprises

use of KBR technology, which TOYO is strong in. TOYO aims

largest in the world, but saw its GDP contract by 6.6% in fiscal

Atmanirbhar Bharat (independent India) policy, an economic

and private-sector companies have announced businessto solve social problems in the field of carbon neutrality and2020 because of the COVID-19 pandemic. It is, however, expected

incentive policy that aims to transition its industrial structureplans related to biofuels, green hydrogen, green ammonia,

expand its business in India, too.

to record a V-shaped recovery and grow by 8.7% in fiscal 2021 andto that which does not rely on imports.

green methanol, and carbon recovery/reuse. In India, TOYOAs a result of these government policies, investments con-then continue to grow at a robust pace in fiscal 2022 and after.

received an order for a pilot plant project to produce green

India’s population is also projected to continue to grow.

tinue to be made in a range of sectors, including manufacturing,Touting its promise to make the country the world’s third-larg-oil, petrochemicals, fertilizers (ammonia and urea), chemicals,

est economic superpower, the Indian government is working

and infrastructure. Until now, investments have been made to

to attract overseas investment and strengthen various types

expand capacity in the fields of oil and gas to meet growing

Jumping-off place for TOYO’s growthfrom Japan to India and theirof manufacturing industries. Since 2014, these efforts havedemand, but large-scale investments are now also expected in

In 2018, TOYO received an order from Hindustan Urvarak

involvement and we executed

been centered on the “Made in India” manufacturing indus-

downstream petrochemical fields to meet changing client pref-& Rasayan Limited (HURL) for a fertilizer plant (daily pro-the project operation andtry promotion policy in order to reduce the country’s chronic

erences and respond to growing per-capita consumption.

duction capacity of 2,200 tons of ammonia and 3,850 tons

completed it successfully. Iof urea) to be built in the city of Gorakhpur, India, a jump-

feel that this was the producting-off place for our growth where we undertook our first

because of efforts to transfer

Global operation example: ammonia and urea plant

TOYO established a local base in India in 1963 when it received

by executing various types of projects including ones related

overseas project. After overcoming several obstacles, suchknow-how from Toyo-Japan

Taku Shigematsu

an order for a fertilizer plant project based on yen-loans. In

to fertilizers, oil refinery, LNG regasification, petrochemicals,

as suspension of construction due to the COVID-19 pan-for a long time.

Project Manager

1976, Toyo-India was founded by expanding that local base,power generation, and FPSOs.

demic and delays in facilities that clients were responsi-

which was done to make effective use of Indian employees in

For global plant projects outside of India that TOYO exe-

India and the Middle East. Since then, the company has exe-

cuted in the 2000s, Toyo-India was responsible for engineer-cuted large-scale EPC projects in India, increased the number

ing, procurement, and construction management. At theTwo significant aspects of this projectof employees from around 30 at the time it was founded topeak time, each year 50 Indian engineers (a total of 250 over(1) Deepened group operations

although on a limited scope. This made it possible to issue

the current approximately 2,000, and grown dramatically into

almost eight years) worked with Japanese engineers at the

While projects of a certain scale were previously executed

more detailed work instructions to Indian construction

one of the top comprehensive engineering companies in India

Toyo-Japan office, where they learned engineering and quality

through collaboration between Toyo-Japan and Toyo-India,

companies appropriate for the status of drawing issuance,

this time, we touted a policy of Toyo-India taking the leadmaterials, and preceded construction, which resulted

in project execution, and immediately after the project wasin more efficient pipe welding work, fewer construction

launched, we located the project office in Mumbai, India,

material losses, and efficient use of materials. By expand-and Toyo-India handled the majority of the work. By limiting

ing the scope of application, it will probably be possible to

Toyo-Japan’s scope of work to overall project management,

manage projects more efficiently.

History of Toyo-India’s Growth
2000s
1980s–1990s
1970s
Founded in 1976

• Independently developed domestic
plant business in India• Evolved into comprehensive engineering company

Transitioned from Low Cost
Center to Profit Center• Increased orders for domestic projects
in India• Expanded independent plant businessto countries surrounding India• Executed engineering, procurement,
and construction management for
TOYO’s global plant projects

800
People30

People4 million rupees(0.5 million dollars)

TOYO ENGINEERING CORPORATION

Integrated Report 2022

2 billion rupees

Expanded the scale of thebusiness• Executed domestic large-scale EPC
projects in India

Transformed into core of
TOYO’s overall EPC operations• Acquired function to serve as Engineering and Construction Planning Center
for TOYO’s global plant projects• Worked to enter carbon neutrality field

2,000

basic engineering, and procurement of some equipment,
it was possible to minimize the dispatch of employees(2) Made active use of DX
This was the first project that TOYO introduced advanced
work packaging (AWP) from the construction stage

Becoming a core base for global
operations while meeting local needs

Data Section• Executed projects in India• Expanded construction projects
from India to Gulf countries

Evolved into comprehensive
engineering company

2020s

2010s

ble for, the plant finally launched operation in March 2022.

Foundation for Sustainable Growth

Toyo-India’s history and future growth strategy

28

methanol from CO2 and completed the design in 2021. It can

United Nations Framework Convention on Climate Change

Medium-term Management Plan

Large-scale investments expected in Indian market

At the 26th Session of the Conference of the Parties to the

Because of its experience in independently executing proj-

Peopleects in domestic projects and the success of this project,

20 billion rupees

I think that Toyo-India can now fully execute large-scale(about
255 million dollars)

EPC projects in India with minimal or no involvement of(about45 million dollars)

Toyo-Japan. I also feel that Toyo-India will grow into a more
Employees

important core base for global projects.

Net sales

TOYO ENGINEERING CORPORATION

Integrated Report 2022

29

Strategy “Advanced EPC Operation”

Management Vision

China

Providing world-class engineering and project management services
Toyo-China’s competitiveness comes from various factors,

Japanese and English. The company is unique in that it has

including possessing a Chinese government–certified engi-

won a large percentage of repeat orders from existing clients

neering design license that makes it possible to execute large-

by completing projects in a manner that highly satisfies cli-scale projects, having extensive experience with projects forents. To further improve the quality of services and cost com-foreign companies, including Japanese companies, and offer-petitiveness, Toyo-China aims to reward clients with shortering world-class engineering services and smooth project man-construction periods and lower costs by accelerating work

agement services on account of employees’ ability to speak

innovation related to project execution and introducing DXoT.

Main projects record in China (number)With a population of about 1.4 billion, China boasts one of theof EPC turnkey lump-sum projects. As of 2022, the company has

world’s largest markets. TOYO entered the Chinese market ingrown in size to more than 400 employees and has been involved

1972, the year that Japan and China normalized diplomatic rela-in excess of 260 TOYO projects in China since 1972.
In recent years, the trend among foreign companies in China

plants and fertilizer plants for Chinese state-owned enterprises

is to make strong investments in the field of fine chemicals,

throughout China, making major contributions to the development

such as materials for semiconductors and lithium-ion batter-of China’s petrochemical and chemical industries. Furthermore,ies. In terms of region, investments have expanded from thestarting in the second half of the 1990s, investment in East

coastal area of the Yangtze River to the Daya Bay region (area

China (the area around Shanghai, Jiangsu Province, and Zhejiang

around Guangdong Province). This is because there has been

Province) by foreign companies accelerated, and TOYO estab-a shift away from traditional construction investment to meetlished Toyo-China as its local EPC (engineering, procurement, anddomestic demand to construction investment in Southern

construction) base in 2004 to handle the strong demand. Toyo-

China, which is well located for Southeast Asia and the Indian

China obtained a Chinese government–certified grade-A engi-

Ocean, for larger production bases (complexes) to captureneering design license, a first for a foreign-owned engineering

demand from throughout Asia, and this shift has been accom-

company, in 2011, and this makes it possible to execute any size

panied by an increase in the total amount of investment.

History of Toyo-China’s Growth
Number of collaborative
projects with Toyo-Japan
increased
Toyo-China founded as local
EPC base• Founded the wholly owned local
subsidiary• Obtained engineering design andconstruction license• Obtained engineering design license(grade-A)(makes it possible to handle EPC
turnkey lump-sum projects throughout
China with no limit on the contract
amount or plant capacity)

Fiscal 2010

9

million yuan

33

40
3

2

1

16
3

33
15
3

1

33

43

43
10
3

2

7
3
19

2

8
3

1

million yuan(about 26 million dollars)

Number of plant construction
projects undertaken independently by Toyo-China rose

Fiscal 2015445

(about 66 million dollars)Potential offered by carbon neutrality–related fields

1.04

when it released its 14th five-year plan in March 2021, theChina is the world’s largest source of CO2 emissions, but• Independently received orders andexecuted EPsCm projects worth about
30.0 billion yen

million yuan

Fiscal 2021

billion yuan

Chinese government officially announced its carbon emissions
would peak in 2030, and the country is aiming to become carbon neutral by 2060. In response to this, both state-owned(about 155 million dollars)

enterprises and foreign companies have been rapidly accelerating carbon neutrality–related investments. TOYO will partici-

Carbon neutrality–related investments in China (forecast)(trillion yuan)

200.0

192.0
Cumulative investment amount (forecast)

150.0
100.0

pate in projects targeting foreign companies in China in fields

2020–
Size of Toyo-China grew even more
dramatically• Increased the number of employees to more than 400• Achieved record net sales in fiscal 2021

related to carbon neutrality, a main global trend, while focus-

50.0

ing on traditional EPC projects in the field of petrochemicals
and chemicals.

Data Section

176

Fiscal 2005

53

13
3

2

2015–

2010–

2004–

2

102

Foundation for Sustainable Growth

tions. In the 1970s and 1980s, TOYO worked on both ethylene

43

Medium-term Management Plan

Massive Chinese Market and Toyo-China’s Growth

0

4.4

11.0

2022

2025

22.0
2030

2060 (year)

Source: Standard Chartered Bank, Trading of Carbon Emissions(about 1 million dollars)

Annual net sales

30

TOYO ENGINEERING CORPORATION

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31

Strategy “Advanced EPC Operation”

business in Brazil for many years, we are able to make effec-

the midst of executing projects that required 2,000 people

tive use of our knowledge and know-how, such as familiar-

in total. We are also reinforcing risk management and gov-

ity of the complex local tax system and labor practices.

ernance by increasing key employees from Japan involved

After overcoming an economic recession that started inin management, projects, engineering, and sales. We will

2015 and lasted for several years and the COVID-19 pan-move forward with winning additional orders and steadily

demic, we have currently received orders from not only

executing projects with an eye toward entering the field ofPetrobras but also Brazilian and foreign private-sector com-

carbon neutrality.

Management Vision

Brazilpanies on account of the good market conditions and are in

Main projects record in Brazil (number)

Brazil, the fifth largest country in the world in terms of area,

government policy, but this year, Brazil’s economy is continu-

possesses a vast amount of potential not only through its

ing on a recovery trend. The business environment is goodown development but also as a target of foreign investment

for various reasons, including the continuing growth in invest-

because of its abundant resources and massive size. Thisments by Brazil’s state-owned oil company Petróleo Brasileiro

year, 2022, is a presidential election year. In election years,

S.A. (Petrobras), the strong development of power sources

economic growth usually slows because of uncertainty about

and auctions related to power line projects due to robust elec-

the economic outlook due to the possibility of changes intricity power demand, and investments in renewable energy.

13

9

31

31

Medium-term Management Plan

Primarily oil and gas but also renewable energy projects expected in
Brazilian market

1
13 3
13

13
2
3

2
3

Total Gas Demand and Supply Forecasts for Brazil(million m3/day)

3

300

200

Foundation for Sustainable Growth3

Demand unrelated to
power generation
Large-scale power
generation demand
Additional demand New gas market

100

Total demand for gas
Total gas supply

Main projects in progress
Products

0(year) 2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Source: Energy Research
Office (EPE) Brazil

2031

TOYO entered Brazilian market in the 1960s
TOYO entered the Brazilian market in the 1960s with

TSPI*1Petrobras as its main client. Various other foreign companies have entered and left the market over the years, but
starting in the 1990s, TOYO has continued to win orders forand execute projects related to various types of plants. In
addition, we established, together with the Brazilian engi-

Construction site

ClientExpected completion

Oil refinery

2022

State of São PauloPETROBRAS

2025

Power lines

2021

State of Minas Gerais

Terna

2023

FPSO module2021

Off the coast Brazil

Saipem2024

Gas-fired power generation

2021

State of Maranhão

ENEVA

2024

Business field
TSE

EBR

handles EPC projects related toonshore facilities.

handles EPCI*2 projects related tooffshore facilities.

Data Section

neering company, TS Participações S.A. (TSPI) in 2012 toYear of orders

further increase our presence, and this year, we marked thetenth year since the company launched operations as our

Feature projects

local subsidiary. TSPI has two wholly owned subsidiaries,
TSE and EBR. In Brazil, there are many cases when projects have local content requirements that require the hiring of Brazilian companies for at least a certain percentageof the work order, which makes possessing a local subsidiary advantageous. In addition, because we have conducted

Oil refinery, gas-fired power generation,
power lines, environment (municipal
solid waste (MSW) power generation
and water treatment)

FPSO module*1 Equity-method company that TOYO has a 50% stake in*2 Engineering, Procurement, Construction, and Installation
Overview of existing refinery (from Petrobras website)

32

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Completed FPSOTOYO ENGINEERING CORPORATION

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33

Strategy “Advanced EPC Operation”

Using DXoT to Improve TOYO’s Project Execution
Reduction of quality-related loss by knowledge management system

tivity on projects will be boosted up by 6 times by fiscal year2025 through “Advanced EPC operation,” powered byEnhancement of project management with centralized Lessons Learned

DXoT. In fiscal 2021, the first year of the plan, we achieved 20% progress toward 6 times productivity improvement.

In addition to the Feedback Knowledge Management System, Establishment of Anomaly Prediction Detection Support System, such

Management Vision

In DXoT strategy, which is one of two pillars in the medium-term management plan, TOYO states that the produc-

as ITB review assisting and underground construction risk detection, enable identification of root cause and prevention of reoccurrence
against the troubles and increased cost.

Digital Twin
Undertaking advanced project management that minimizes damage in the face ofimminent risks using simulations in virtual spaces and taking preventive action
upfront in real world
Project members

ClientVendorSubcontractor

Sophistication of knowledge
management system

Anomaly Prediction Detection Support System• Build up the system that naturally accumulates andutilizes knowledge by integrating experience, collective
knowledge, and organizational knowledge.

Corporate executive

Digital twin

Forecast

Project twin

TAKUMI

Pricing
AdvisorSupply Chain
Optimizer

Constructability
Optimizer

Project Health
AdvisorBottleneck
Analyzer

Registration, Management,
Utilization

Preventing troubles

Corporate twin

Engineering
AdvisorLessons Learned

Discussion,
Resolution,
Accumulation

Feedback
Knowledge
Management
SystemData CentricEngineering Tools

Structured/unstructured data

Inquiry Management System
Supply Chain Management Systems

DATA
HUB
Mastertag
Procurement
Construction
Hub
Hub

Material information required by Construction

Project
Execution
through
AWP*1

PWP

Drawing information required by Construction

Drawings

EWP*2

Schedule Management Systems
Engineering Document Management System*1 Invitation to Bid

Construction Management System
Work Packaging System
Resource Management System*2 UndergroundCWP*4

DXoT Return on Invested Capital measurement model
Measuring DXoT Return on Invested Capital using three-level KPIs and managing
progress to increase productivity sixfold
Through this model, one can see a chain of values of achieving advanced EPC operation (sixfold increase in productivity) in the medium-term management plan by improving the business process through the investment.

*3

KGI

Resources

Proactive Corporate
Management

Data Leverage

Improvement of project
adaptability and resilience

Improvement of quality andspeed of communication thatmakes proper management
decisions possible

Reinforcement of reschedulingcapability and resilience toshorten project periods*JIT: just-in-time delivery• Visualization of business resource
information in real time

• Productivity improvement of individual activities through digital
innovations• Improvement of forecast precision forvarious plant project information• Project scheduling using optimization technology• Advanced profit management basedon a high-speed PDCA cycle• Data-driven project management
execution

True
value Sixfold increase in productivity

Shorten overall project period

global operation
Fruit 2

Increase gross profit /employee's satisfaction

KPIs foroutcome• Improve productivity and cost performance• Increase reliability of risk management• Prevent unplanned work / reduce invisible costs
Achievement percentage =percent of target achieved

Achievement percentage
Fruit 1

Reduction of overhead cost

KPIs for
output

ROI=1
Data Section• JIT of Engineering information,
Materials, and Resources*

Utilize accumulated data for
AI enhancement

Cost Management System

CC Driven Engineering*5• Integrated Project Schedule
Management by backcasting fromconstruction

UG Constructability
Hazard Detection AI*2

Detect UG risks

Deepen Accelerate cycle through• Digitalization of EPC execution©2021 SOLIZE Corporation

Knowledge
AdvisorConstruction
site
Materials

Extract feedback ofrequired actions during ITB Review

Foundation for Sustainable Growth

Data Analysis
Platform

Project
control
Hub

EngineeringHub

ITB*1 Review AI

Use accumulated data toteach/strengthen AI
Accumulate results as data

Accumulate projecttrouble information
Engineering Management Systems

Utilize accumulated data for
AI enhancement

Medium-term Management Plan

Turn tacit knowledge into explicit
knowledge using collaboration
tools and accumulate/leverage
the knowledge

Turn into
organizational
knowledge• Apply AI to detect risks that are difficult to envision at the
proposal/engineering stage• Equalize genus decisions/actions and enhance quality ofdecisions/actions of inexperienced person by indicating thecriteria by AI.

Return on investment
Value

KPIs for
input

EvolveProcess innovation x Digital

Expand and accelerate applying
global standard business process

Investment*1 Advanced Work Packaging (a process driven by construction planning and method for digitalized project execution managing work packages throughout project)*2 Engineering Work Package *3 Procurement Work Package *4 Construction Work Package*5 New business process to optimize engineering and procurement by back calculating from commissioning and construction

34

TOYO ENGINEERING CORPORATION

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Strategic planning

TOYO ENGINEERING CORPORATION

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35

Mission and Materiality

Engineering for Sustainable Growth of the Global Community

Message from the Chair of the
Sustainability Committee

Management Vision

MissionSustainability Initiatives

Over the last few years, the international economic community has faced universal issues, including responding to climatechange and realizing a balanced form of sustainable growth.
Companies, too, are being called on to contribute to the res-

Materiality and Our Commitment

olution of various issues outlined in the UN’s Sustainable
Development Goals (SDGs).
To realize our mission of “Engineering for sustainable

Enrich people’s
lives

Environment

People of diverse
backgrounds
engage in active,
meaningful work

SocialEstablish anorganization
with integrity
and discipline

Governancerialities”—or priority management issues. Through our Basic
Policy for Sustainability, we also intend to carry out our societal
duty as an engineering company.
At TOYO, our Code of Conduct forms the cornerstone of ourbusiness management, as we endeavor to maintain and improve

Contributing to the achievementof a circular economy
To reduce the environmental impact
by reusing waste, we are promoting
initiatives aimed at the development
and social implementation of the relevant technologies.
Waste control and treatment
Through our overall business activities—which include plant construction— we are striving to minimize
waste discharge and to achieve suitable treatment and reuse.

KPI

9 cases

Examples of Projects:• PET bottle recycling plant• Biomass power plant

36

TOYO ENGINEERING CORPORATION

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Contributing to the resolution offood problems
By constructing fertilizer plants, weare contributing to improved agricultural productivity in countries aroundthe world.
Transferring technology through
EPC implementation
We are creating jobs and transferring technology in various regions at
each stage of the plant construction
process.

KPI
Cumulative
number of orders
and business
investments fromFY 2021• Food supply• Energy supply• Foundation of life

Results for
the FY 2021

Training and developing humanresources
We are striving to train and develop
the abilities of diverse human capital
who can contribute to the achievement of a sustainable society by providing engineering at the global level.
Promoting inclusion
We are doing everything in our
power to respect diverse people andpersonalities as well as the culturesand customs of various countries
and regions while striving to eliminate discriminatory practices.

Examples of Projects:• Fertilizer plant• Biomass power plant• Ethylene plant , pharmaceutical plant

Compliance
By fleshing out our education andtraining, internal reporting system,
etc., we are implementing compliance throughout the TOYO Group.
Corporate governance
We are working on building andrunning suitable systems based onJapan’s Corporate Governance Codewhile comprehensively achieving
effective risk management.

Improving the work-life balance
We are striving to build a workplace environment that provides job
satisfaction and aims at a balance
between the work and private livesof employees.

To oversee our Group-wide sustainability initiatives,

in December 2021, we now also engage in management thatin November 2021, we established the Sustainability

conforms to the Ten Principles of the Global Compact, related toCommittee*1 as an advisory body to the Executive Committee.

human rights, labor, the environment, and anti-corruption.

The Sustainability Committee considers, promotes, and mon-When it comes to sustainability, we recognize climate

KPI

Lost Time Incident
Rate=Total Lost Time
Incidents × 1 million /Employee Worked
Man Hours

Results for
the FY 2021

3.63

out of 5(FY2020 = 3.37)

0.05

Achieved KPI
of 0.1 or less

KPI

Results for
the FY 2021

Number of serious
violations ofcompliance

0 casesNumber of Major
Information
Security Accidents

0 casesitors Group-wide sustainability initiatives and is supervised by
the Board of Directors.

November 2021, we expressed our support for the recom-

TOYO is an organization that possesses integrity and thatmendations of the Task Force on Climate-related Financial

employs a diverse and motivated workforce. To retain the trust

Disclosures (TCFD), and in June 2022, we made disclosures

we have earned from society and from our stakeholders, weand announcements in line with these recommendations.

intend to fulfill our unique duties as an engineering company

As part of our efforts to contribute to the realization of theand to contribute to the sustainable development of the inter-

Paris Agreement, we have established targets of reducing ournational economic community.

own greenhouse gas (GHG) emissions by 30% by 2030 andanalyses into the Green Strategy of “Sustainable Technology*1 The Sustainability Committee is composed of the CCO (compliance), CTO (technology), the General Manager of the Corporate Strategy Division (strategy), the General
Manager of the SQE Management Division (safety, quality, and the environment),
the General Manager of the Finance and Accounting Division (finance and accounting), the General Manager of the Corporate Administration Division (organizationand human resources), and the General Manager of the Corporate Communications
Department. The Committee coordinates and collaborates with business divisions,
EPC divisions, technology divisions, etc.—both on Group-wide sustainability andon business- or field-specific sustainability—and promotes sustainability initiatives
across the entire Group.

Sustainability Basic Policy

The Positioning of the Sustainability Basic Policyof achieving net zero by 2050. We also intend to contribute to
reductions of emissions generated by third parties by cooperating with our stakeholders and by providing the necessary
technologies, products, and solutions.
We have incorporated strategies based on various scenario

Promoting health management
and improving occupationalsafety and healthIn addition to promoting the healthmanagement of our employees, we
strive to maximize safety and healthduring our business activities, including plant construction.

Rating of
Employees’
engagement
survey5 cases
14 cases
24 cases

Our Commitment

Management Plan, which runs from 2021–2025.

TOYO will contribute to the sustainable development ofcorporate value and the sustainability of the global society based on our mission of “Engineering for Sustainable
Growth of the Global Community.”
In response to various issues, TOYO will fulfill our unique roleas an engineering company by providing solutions that realize the harmony between the supply of energy and materials
and global environmental conservation, which are indispensable for the sustainable growth of the global community.
TOYO is committed to addressing environmental (E), social(S), and governance (G) issues and sustainability based on
the materiality of “Aim to realize an environmentally friendly
society,” “Enrich people’s lives,” “People of diverse backgrounds engage in active, meaningful work” and “Establish
an organization with integrity and discipline.”

Corporate Philosophy (MVV)

Materiality

TOYO’s Codeof Conduct

Data Section

Cumulative
number of orders
and business
investments fromFY 2021

Results for
the FY 2021

Contributing to the developmentof industrial infrastructure
We are utilizing TOYO’s global network to provide plants equippedwith state-of-the-art technology,
thereby contributing to the development of industrial infrastructure incountries around the world.

Our Commitment

and Business Development” in our current Medium-term

Foundation for Sustainable GrowthPursuing low-environmentalimpact plants
By promoting energy saving and theuse of renewable energy, we arecontributing to reducing the environmental impact of industrial fields.

Our Commitment

Director, Senior Executive Officer

our integrity. Having signed up to the UN Global Compact (UNGC)

change to be of particular importance. For this reason, in
Our Initiatives

Noriyoshi Torigoe
Medium-term Management Plan

Aim to realize anenvironmentallyfriendly society

growth of the global community,” we have defined four “mate-

Sustainability Basic Policy
Other related Policies(Management Strategy)
Medium-termManagement Plan

Business Plans

TOYO ENGINEERING CORPORATION

Integrated Report 2022

37

ENVIRONMENT
Aim to Realize an Environmentally Friendly Society

Addressing Climate Change(Disclosure Based on TCFD Recommendations)Management Vision

Scenario Analyses: the World in 2050

TOYO recognizes that protection of the global environment andprevention of global warming are common issues for all humankind. We conduct business activities as our mission “Engineering

Rise in average temperature of 2.6˚CRise in average temperature of 1.5˚CStated Policies Scenario (STEPS)Net Zero Emissions by 2050 Scenario (NZE)• Increased energy consumption, increased demand for fossil fuels

for Sustainable Growth of the Global Community” and under the slogan “environmentally-friendly society”
which is one of our materialities. In November 2021, TOYO expressed its agreement for the recommendationsof the Financial Stability Board (FSB)’s Task Force on Climate-related Financial Disclosures (TCFD), and based on(Continued reliance on fossil fuels, rise in fossil fuel prices, improvements in energy efficiency)(Significant shift to electrification and non-fossil fuel use, fall in fossil fuel prices, significant improvements in energy efficiency, widespread implementation of carbon pricing schemes, increased energy
savings and resource circulation)• Increasingly severe natural disasters• GHG emissions remain flat until 2050

• Gradual increase in major natural disasters

these proposals, TOYO has established the strategies and promoted initiatives.

• Net-zero GHG emissions by 2050

Major Risks and Opportunities

Governancemate change is a crucial management issue which does not only

Transition risks(primarily for 1.5˚Ctemperature rise
scenario)

Board of Directors

reduces risks but also leads to business opportunities. Fromthe perspective of raising corporate value over the medium
to long-term, we have set up the Basic Sustainability Policies,

Carbon pricing scheme

Technologies

Markets

Executive Committee

matters are examined, promoted and monitored by Sustainability
Committee, an advisory committee to the Executive Committee.

Sustainability Committee

The basic policies and important matters are discussed andauthorized at Board of Directors after deliberation by the
Executive Committee.

Operating Division• Insufficient responses to more stringent environmental permit requirements may
result in reduced orders, missed business opportunities, and increased costs• Delays in developing new technologies may result in lost orders and missed business opportunities

Energy savings andoptimization
Change in energy mix,
demand, power configuration, and key
products• Delays in responding to energy savings may result in decreased opportunities for
new construction projects and modification projects• Reduced demand for fossil fuels and transitions to alternative fuels may result in
reduced demand for conventional plants• The realization of geo-economic risks may increase pressure on energy supplies,
while energy transitions may result in volatile fossil fuel prices

Supply chains• Supply chain issues may result in adverse impacts on stable procurement of raw
materials and equipment, as well as on suppliers, local freight transporters, andsubcontractors• Insufficient responses to climate change may result in adverse impacts on orders,business opportunities, partnerships, securing human resources, and financing
due to poorer reputation among customers, partners, and markets• Increasingly severe natural disasters (acute: typhoons and flooding; chronic: longterm heat waves and rising sea-levels) may adversely impact construction work,
procurement, transportation and productivity, and may also lead to increased
occupational safety costs

Physical risks(primarily for 2.6˚Ctemperature rise
scenario)

Initiatives for and contributions to fighting
climate change
Natural disasters due
to abnormal weather
conditions

Acute
Chronic

Opportunities• Appropriate introduction of carbon pricing schemes may lead to increased orders
and business opportunities for renewable power generation and non-conventional
plants and to improved competitiveness due to low-carbon procurement of raw
materials and equipment• Use of government assistance may facilitate the development, verification, andimplementation of new technologies• The development, verification, and implementation of CCUS and new low-carbon anddecarbonized fuel technologies may lead to the acquisition of orders and business
opportunities and facilitate transition to a circular economy• Increased opportunities for energy savings and optimization• Development of renewable power generation and new technologies may lead toincreased orders and business opportunities centered on alternative fuels• Increased use of renewable energy in numerous countries and regions overseas may
facilitate risk diversification, lead to lower medium- and long-term costs for fossil
fuels, and lower prices and increased uptake of renewable power generation facilities• Focused procurement on the back of proper assessments and selective choice of
suppliers, differentiation based on partnerships and alliances, supply chain management, and more efficient construction work
• Differentiation and increased opportunities due to better or more establishedreputation• Maintenance and expansion of business due to: risk management, insurance coverage, contract conservation, and cost reductions at eligible worksites; supplier
diversification and identification of alternative suppliers; modularization and use of
remote technologies; implementation of business continuity plans

Risks, Opportunities, and Impacts on TOYO’s Business Fields (Business fields impacted by climate change in particular)
Materiality

Risk Management

Environmentally friendly society
Field

Based on our Basic Policy of the Internal Control System,

and implement risk management. Regarding identification

TOYO identifies the events of potential risks, including

and assessment of climate change-related issues, we com-changes in the business environment, clarifies the pro-ply with the framework recommended by the TCFD, andcesses for classifying, analyzing, assessing, and responding

analyzes important factors affecting our business throughto risks, and the divisions in charge and related regulations,scenario analysis and reflects in the medium-term manage-

develops and implements risks management system. In

ment plans and other strategies.

order to identify and mitigate potential risks as quickly as(For more information about “Risk Management,” see p56)

possible, we periodically review and identify key risk items

Risks and Opportunities/Scenario Analyses and Strategies from
Climate Changei

Examplebusiness fields

Next-generation energy—

EnergyRise of 1.5˚CMedium-term(to 2030)

Long-term(to 2050)

Start implementation

Full-scalecommercialization

Transition

Significant
reduction in oil

Transition measuresand green electricity

Reduction in fossil
fuel-types(Long-term) Reduced orders and business opportunities for gas-fired power plants dueto the transition to clean electricity; however, short- and medium-term opportunities
will increase during transition
Increased orders and business opportunities for overseas projects and large-scale domestic projects, on the back of abundant expertise and experience in renewable energy
Increased orders and business opportunities for ammonia co-firing in existing thermal power plants

Strong growth in emerging countries
Gradual transition to and implementation of
non-conventional plants

(Long-term) Reduced orders and business opportunities due to decreased demand forconventional fossil fuel plantsIncreased orders and business opportunities due to the gradual implementation of
non-conventional (CCUS implementation and green) plants and to conversions to alternative fuels at existing plants
Increased opportunities in circular economy fields such as energy savings, waste plastics, and recycled plastics and in high-performance material fields

Low-carbon, newproduction methods,
renewable energy,
and recycling

Transition

CirculareconomyChemicalPetrochemicals

Strong growth inemerging countries

In line with the TCFD recommendations, the report is basedsociety (1.5°C scenario), and “physical risks” refers to themainly on (1) the 2.6°C scenario* (Stated Policies Scenariorisks that would take place in the emissions reduction failure(STEPS) and (2) the 1.5°C scenario* (Net Zero Emissions by(2.6°C scenario).

Metrics and Targets

2050 Scenario (NZE)). “Transition risks” refers mainly to the*Refer to World Energy Outlook 2021 of the International Energy Agency (IEA)

TOYO has set the following targets to reduce GHG emissions.

P romotion—including co-creation partnerships—of EPC,
non-EPC (pre/post-EPC, technological development, and business development), and value
chain construction, for the initiatives listed below:C arbon-free fuels: ammonia andhydrogen fuel; decarbonized
power-generation fuels;
e-fuels including SAF, synthetic
methane, etc.; renewable andgreen electricity
CCUS and green petrochemicals:
blue petrochemicals; CO2-derived petrochemical feedstockand fuel; EOR; DAC
Energy savings and more efficient resource use
Recycling and circular economy:
recycling of waste plastics

We have incorporated the above scenario analyses in our Medium-term Management Plan (2021–2025) strategies.

Scope 1&2
• Achievement net zero emissions by 2050
• Reduce emissions 30% by 2030 compared to 2021 (basedon GHG emissions per employee)*

Data Section

risks that may occur in course towards the decarbonization

Green initiatives and policies(For further information, please see
the “Solutions” section of the company website)

Next-generationenergyRenewableenergyGas-firedpower
generation

Key Transition Risks ( ) and Opportunities ( )(Long-term) Reduced opportunities for conventional oil and gas plants due to transition to clean fuels; however, short- and medium-term opportunities will increaseduring transition
Increased orders and business opportunities on the back of expertise and experience inammonia, hydrogen and syngas technologies, and CO2 recycling. In particular: the useof ammonia as a power generation fuel, shipping fuel, and hydrogen carrier; SAF as anaircraft fuel; hydrogen fuel and fuel cell batteries; CCS-EOR; resource circulation andenvironmentally friendly initiatives

Oil and gas

Infrastructure

Strategies and Initiatives

Quality of life

Business environment (market)
Rise of 2.6˚CMedium- andlong-term(to 2050)

Foundation for Sustainable Growth(For more information about “Corporate Governance,” see p50)

Reputation

Risks• Introduction of carbon pricing schemes may lead both to decreased demand forconventional plants due to falling demand for fossil fuels and to increased plant
costs due to rising costs of raw materials and equipment

Licenses and support
systems
New technologies

President & CEO

and established the system for the Board of Directors to properly supervise these initiatives. The climate change-related

Item
Policies,
laws andregulations

Medium-term Management Plan

We recognize that addressing sustainability issues such as cli-

• Reduced energy consumption, reduced demand for fossil fuels anddecarbonization

Scope 3
• We will contribute to the reduction of emissions by cooperating with stakeholders and providing technologies, products,
and solutions (through the above strategies and initiatives).

*The amount of emissions (Scope1&2) in 2021 was approximately 12,800 tons (1.71 tons-CO2/person), and we will strive to achieve this goal.

38

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39

ENVIRONMENT
Aim to Realize an Environmentally Friendly Society

Environment

Regarding the environment (E), TOYO has stipulated “minimize
environmental burden by saving resources and energy, detoxi-

its Basic Policies on HSE, Quality, and Information Security.

conducts an annual review of reductions in the environmental

when the power supply is strained nationally.

impact of the Head Office in Japan and examines activities for theElectricity consumption, tap water and rainwater consump-following fiscal year. We also raise the environmental awarenesstion, and purchase volume of printing paper at the Head Office inof employees through activities such as switching to LED lights,

Japan are shown in the following graphs. In fiscal 2020 and fiscal

using rainwater captured on the roof of the Chiba Head Office to2021, the number of employees working from home grew, which

flush toilets, turning off lights during break times, and opening

resulted in a relative decline compared to previous years.

Electricity Consumption

Tap Water and Rainwater Consumption

Purchase volume of printing paper(wood-free paper)(X106kWh)(X1,000m3)(100 tons)

5.00

35.0

able community and society enabling both the devel-

25.0

opment of humanity and environmental protection.

4.00

15.0

vide engineering services in harmony with the

10.0

global environment.

5.0

kind, TOYO has also established “aim to realize an environ-

3.00

mentally friendly society” as a materiality, and carries out its

To achieve this philosophy, we will continue actively striving to(FY)business based on the basic philosophies stated on the right.

resolve the environmental issues of customers.

executing projects in Japan and within related divisions. We

1. Evaluate compliance with environment-related laws
2. Formulate and implement the set of three environment-related actions (evaluate environmental

also confirm that these actions are effectively implemented

impact, set environmental target, and implement

through internal audits.

environmental program)

Reducing waste at construction sites in Japan and overseas and at
the Japan Head Officein Japan, we safely dispose of hazardous substances andmanage contaminants. Since obtaining ISO 14001 certificationin 2004, we have maintained zero environmental accidents.

Waste Generation Amount at Domestic and Overseas
Construction Sites and the Japan Head Office from 2015 to
2021 (Seven Years)(Tons)(Tons)

50,000200
160

ume of waste and have maintained a recycling rate of more

30,000120

than 88%.

20,00080

10,000

40

0

0

(FY)

2015

2016

Overseas sites (left scale, Year)

2017

2018

2019

2020

Note. For overseas waste, the scope was expanded to include all group companies starting in fiscal 2018.

Integrated Report 2022

0.00
2012 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21
Tap water consumption(FY)2012 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21

Rainwater consumption

TOYO contributes to the creation of an environmentally friendly

at plants. In addition to the following initiatives that have alreadysociety through its involvement in numerous projects related tobeen practically implemented and adopted in society, we are mov-technology development, engineering, and construction of circular

ing forward with technology development and feasibility studies

and low-environmental-impact plants, centered on energy savings

related to carbon neutrality, such as CO2 value chain.

Details

Urea process
ACES21®
Spout-Fluid Bed Type
Granulation Process

These are core products since its founding that TOYO has
made repeated improvements to as a licensor and that provide energy-saving urea synthesis technology and spoutfluid bed type granulation process technology to clients
throughout the world.

Distillation system®

This is technology for a broad range of oil refinery and petrochemical plants that promotes energy savings. The technology offers strong economic benefits while maintaining
traditional maintainability through the use of existing distillation technology without the need for special equipment.

Energy saving / GHG
reduction
Consulting service
HERO

This is a consulting service that involves a comprehensive
analysis of overall processes and utilities using numerical
optimization technology to achieve energy saving and GHG
reduction for the overall plant.

PET bottle recycling
factory

A PET bottle recycling factory that also handles low-grade
waste PET bottles is currently being constructed.

Biomass power plant

As of June 2022, we have received twelve plant construction orders with a total output of about 650 MW, which weare executing one after another.

Large-scale photovoltaic
power plant

As of June 2022, we had completed ten construction projects with a total output of about 700 MW.

2021

Domestic sites (left scale, FY)

The Japan Head Office (right scale, FY)

TOYO ENGINEERING CORPORATION(FY)

Large-scale photovoltaic power plant /Biomass power plant project results

Large-scale photovoltaic
power plant
Biomass power plant

Data Section

40,000Even at construction sites in Japan, we work to limit the vol-0.0
2012 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21

Target product/service

tor construction sites

struction sites in Japan and overseas but also the Head Office

0.20

Exemplary initiatives

3. Take environmental measurements at and moni-

In addition to thoroughly separating waste at not only con-

0.40

Foundation for Sustainable Growthenvironmental management actions stated on the right when

0.60

Pursuing low-environmental-impact plants and contributing toachieving a circular economy

Environmental Management
In line with ISO14001 certification standards, TOYO takes the

0.80

20.0

• As an international company, we will strive to pro-and preventing global warming as issues facing all of human-

1.00

40.0

30.0

Recognizing the preservation of the global environment

40

the power receiving system in order to reduce peak load at times• We will contribute to the achievement of a sustain-

fying, reducing and recycling waste, and by preventing environmental pollution during the course of our work activities” withinand closing blinds. Since 2020, a battery system was added toso-called green meeting headed by supervising officers, TOYO

Medium-term Management Plan

Basic Policy and Principles on the Environment

Having established an Energy & Resource Saving Council andManagement Vision

Reduction of Environmental Impact from offices

TOYO ENGINEERING CORPORATION

Integrated Report 2022

41

SOCIAL“Enrich people’s lives” and “People of diverse backgrounds engage in active, meaningful work”

Human Capital

Expand human capital to advance the medium-term management plan by reforming
our human capital system and strengthening human capital development
Management Vision

Promoting the development of human capital by type through rotation
A new human capital system was introduced in April 2021 to realize the Blue Strategy (Advanced EPC Operation) andGreen Strategy (Sustainable Technology and Business Development) of the medium-term management plan. We haveestablished the following human capital development policy, based on rotation, to hone a variety of skills, including professional skills, interpersonal skills, and problem-solving skills.

Conventional EPC business will be shifted from Toyo-Japan to
our group companies more than ever before to strengthen EPC
through the advance group operations and DXoT. Accordingly,
Toyo-Japan employees will be involved in more challenging projects to ensure competitiveness. Specifically, we must develop
human capital with advanced skills, such as technical supervisors
who can provide technical guidance and project managers who
can organize teams consisting of diverse members.
For this reason, we continue to provide younger employeeswith on-the-job training. In recent years, we have taken on a large
number of domestic projects; this has enabled younger employees
to experience on-the-job training in fields where opportunities tovisit actual sites and encounter actual objects had been dwindling.
Going forward, we will give mid-level employees with opportunities for growth by providing them with management experiencethrough participation in stand-alone projects at TOYO Group companies. Experience of executing conventional EPC workflows
is vital both for taking advantage of DX-inspired reforms, and for
implementing continued improvements going forward.

Sustainable technology and business development areas requiredifferent kinds of human capital compared to EPC implementation.
In particular, essential requirements include, among other things,
the ability to think quickly and flexibly, and the trait of being able toact without fear of failure.
We also need dynamic human capital with the capacity to build
hypotheses in unknown fields, and to act on these hypotheses without being constrained by past experiences. We will cultivate a variety
of skills, including the power to explore and implement new business models, the ability to evaluate technologies, and the quality
to build external networks to enable open innovation. We believethat recruiting human capital with the potential to perform in new
business areas, providing them with opportunities to take on new
challenges, and having them gain experience in real business environments will enhance the quality of our human capital over the
medium to long term. When developing new technologies and businesses, it is vital we utilize the initiative and new ideas of our employees, give them time to focus on the tasks at hand, and allow them tomake mistakes. For this reason, we intend to work on establishingrules and fostering an organizational culture that allows employees
to continue working at their tasks until they achieve their end-goals.

Promoting Women’s Participation and Advancement in the Workplace
At TOYO, we operate a system to enable female employees who join the company as non-career employees totransfer to positions with opportunities for promotion;
this system is intended to encourage female employees
to embark on career challenges. Starting in fiscal 2022,
we have changed our human capital system for non-career employees from a seniority-based system to a system aligned to the difficulty of the employee’s job.
Here, we hear from Yuki Tadano, a female employee
who joined TOYO as a non-career employee and switched
to a career position employee.

42

TOYO ENGINEERING CORPORATION

Integrated Report 2022

PurposesBase in any field. As the need grows, gain digital insights, strengthen professionalism, and explore careers.

Specialized

Acquire different perspectives and relevant knowledge to strengthen their own targeted expertise.

Career grasping

Gain the knowledge and viewpoints necessary to become the ideal image of human capital in the future.

Project manager

Have a specialty through experience in engineering and construction. Learn skills to cover a wide range of areas after transferringto the project department.

New business

Experienced in EPC business, then transferred to a trading company or a venture company to acquire knowledge and know-how thatwas not available within the TOYO Group, so that employees can develop the skills to promote new businesses.

Career seeking

Experience different areas of the business to determine their own aptitudes and specialization.

To date, we have utilized the outside transfer of employees as away to strengthen business relationships and gain a wide rangeof experience unavailable within TOYO. Going forward, we plan
to further expand the number of companies to which our humancapital will be seconded, such as venture companies and specialized agencies, to create an environment where diverse experiences are possible.

Group-wide DX Skill Improvement Seminars
In the field of DX, we carry out individual initiatives with specific topics; however, in order to improve the DX capabilities ofthe entire Group, we also held DX Skill Improvement Seminars
for all Group employees. Our new recruit training covers topics
that are almost identical to those covered in these seminars. After
CourseTeams (elementary)

employees understand how to use DX tools, it is imperative they
use these tools to bring about work process reforms. Going forward, we plan to provide regular opportunities for employees tolearn new skills and also focus on how they can utilize them.

Eligible employees
All executives and employees

Date

Seminar Style

December 2021
January andFebruary 2022

Hands-onTeams (intermediate)

All executives and employees

January 2022

Teams

SharePoint Online

All executives and employees

February 2022

Teams live event

Power BI Viz Reader

All executives and employees

January 2022

Teams live event

Goldfire

All executives and employees

January andFebruary 2022

Video -> lecture tocheck employee
understanding

Power Automate/Power
Apps (Overview seminar)

All executives and employees

January 2022

Teams live event

Power Automate/Power
Apps

Employees nominated by their departments•E mployees who will be primarily responsible for using these tools

January andFebruary 2022

Teams

Bluebeam

All executives and employees at the Engineering and Technology Unit
All executives and employees at the Construction Division
Employees at other departments who carry out reviews and mark-ups of engineering drawings

November 2021

Teams

Bluebeam (English
version)Non-Japanese employees

February 2022

Teams

TeamBinder

Engineering and Technology Unit
Plant Solution Business Unit
Environment and Infrastructure Business Unit
Procurement Division
Construction Division
Proposal DivisionDecember 2021
January 2022

Video -> lecture tocheck employee
understanding

Alteryx

Employees nominated by their departments• Future department CoE candidates• Employees who have an interest in data processing, analysis, and visualization• Employees who feel limited by Excel when handling large volumes of data
• Employees who have used Power BI, but who have not used Alteryx• Employees who do not have the Alteryx Advanced Certificate

February andMarch 2022

Teams

TOYO ENGINEERING CORPORATION

Integrated Report 2022

Data Section

When I joined TOYO, I was assigned the role of project secretary.
I had a number of opportunities to visit our project sites, to act asa receptionist at groundbreaking or completion ceremonies, andthrough these visits, I developed an interest in working on-site—
and the Environment and Infrastructure Project Division gave me
the opportunity to do so.
I was appointed project engineer for a domestic biomass power
plant project. However, I am a sociology graduate, and I was unable
to understand what the people around me were saying. At the
beginning, I struggled immensely. I didn’t know how to read drawings and specifications, I couldn’t understand what was being discussed at meetings so I couldn’t write minutes, and I was unable
to fully comprehend what was being explained to me. This state ofaffairs continued for a while.
I was then tasked with making
on-site arrangements for domestic transportation with an equipment manufacturer. I was unable
to conclude the discussions satisfactorily, and I ended up inconveniencing various parties. However,Yuki Tadano
I collected information from theEnvironment and Infrastructure
equipment manufacturer about theBusiness Unit
Environment and Infrastructure
products we had ordered, and I did
Project Division
my best to ensure that we would
Tadano joined TOYO in 2017
receive the products smoothly.
as a non-career employee andLater, when I went to the site inswitched to a career position
employee in 2021.
question, I saw with my own eyesthat the equipment I had arranged had arrived as planned and was
being installed. It taught me how different jobs were interconnected—and of course, I was extremely pleased to see that sucha large piece of equipment had been successfully installed.
Since joining TOYO, I have learned that not fearing change
and, instead, being willing to undertake new challenges can be
extremely enjoyable. I realized that if I took the first step, I would
open myself up to many more possibilities. I also experienced
first-hand that TOYO has a system that encourages and provides
support for such challenges.

Type
Digitally focusedFoundation for Sustainable Growth

Development of green human capital(Sustainable Technology and Business Development)

in a wide range of fields. For each of the following types, weclearly state the transfer purpose and promote proactive careerdevelopment.

Medium-term Management Plan

Development of blue human capital(Advanced EPC Operation)

Under the new human capital system, rotation has been added
to the promotion requirements for younger and mid-level employees to provide them with multiple perspectives and experience

43

SOCIAL“Enrich people’s lives” and “People of diverse backgrounds engage in active, meaningful work”

Social Contributions

IKPT: COVID-19 vaccination program

Toyo-India puts a lot of energy into corporate social responsibility (CSR) every year.

Prevention of COVID-19 transmission is the Company's pri-held vaccination program for employees through the Mutual

It has been seven years since the company launched efforts in a wide range of fields, including healthcare promotion, disasterority in order to create a safe and healthy work environment.

Cooperation (called “Gotong Royong”) Program. The program

prevention, education promotion, female empowerment, and environmental sustainability. The following are the main activities

For Indonesian subsidiary IKPT continued to implement a

is provided for the employees and their family members. IKPT

undertaken in fiscal 2021. Toyo-India also built educational facilities and implemented various healthcare initiatives to offer health-strict health protocol in order to maintain employee healthfully support the national vaccination program to acceleratecare services to the poor.

during activities both at site projects and Jakarta office. On

the economic recovery.

Gorakhpur, Uttar Pradesh, India
Barmer, Rajasthan, India

Management Vision

Toyo-India: Social contribution activities in India in fiscal 2021

August 27th, 2021 at Wisma IKPT Jakarta, the Company

Provided ICU ambulances, dialysis equipment, and various equipment for operations to hospitals near project sites
Medium-term Management Plan

Constructed ICT classrooms and libraries
in local schools near project sites

Toyo-Japan: UNICEF foreign coin donation activity

Constructed four classrooms and a laboratory at a school in the city of Thane, a suburb of Mumbai

At Toyo-Japan, which is involved in plant construction

eign coin donation and, within Japan, calls for donations ofprojects in countries throughout the world, many employees

unused foreign coins and bills that remain from overseas

spend years at construction sites in various countries andbusiness trips or travel.

often use local currencies. Over the years, the company has

UNICEF makes various appeals for donations and sup-collected 30 kg of currencies from a total of 28 countries, par-port, and one of these is this foreign coin donation, in whichticular those in Asia but also those in the Middle East, Africa,

collected foreign coins and bills are separated by currency

and Central and South America. Knowing that lives can be

and then used to support children throughout the world.

saved with the foreign currency people have with them, we

For example, with four dollars, ten doses of a measles

support UNICEF, which undertakes activities to protect thevaccine can be purchased, and with five dollars, one hundred

lives and health of children throughout the world, and will

disposable syringes (5 ml) can be purchased, making it possi-

continue to participate in this activity as a volunteer activity

ble for children to receive vaccinations with safe equipment.

that anyone takes part in.

Foundation for Sustainable GrowthThane, Maharashtra, India

Since 2020, Toyo-Japan has taken part in the UNICEF for-

Kodinar, Gujarat, India
Data Section

Provided oxygen concentrators for hospital use to treat people with COVID-19,
pharmaceuticals, and small clinical equipment to facilities near project sites©Japan Committee for UNICEF

44

TOYO ENGINEERING CORPORATION

Integrated Report 2022

TOYO ENGINEERING CORPORATION

Integrated Report 2022

45

GOVERNANCE
Establish an Organization with Integrity and Discipline

Directors and Audit & Supervisory Board Members (As of July 1,2022)
Outside Directors

Audit & Supervisory Board Members

Director, Senior Executive Officer,
Chief Compliance Officer

Outside Director
Independent Officer

Noriyoshi Torigoe

Masami Tashiro

Reasons for appointment
Mr. Tomohisa Abe, having been engaged in the plant sales
and marketing divisions of the Company for many years,
possesses ample experience and deep insights related
to planning sales and marketing strategies. Mr. Abe hasserved the Company as Representative Director, Senior
Executive Director, and Unit Director of the Plant Business
Unit; in his role supervising the overall sales activities of
the Group, he has been responsible for the management of
the Company. Mr. Abe assumed office as Chairman in April
2020 and, as Chairman of the Board of Directors, ensuresproceedings are carried out properly.

Term of office for Directors 1 years and 11 months
Attendance at Board of Directors meeting 19/19 (100%)Term of office for Directors 7 years
Attendance at Board of Directors meeting 18/19 (94.7%)

Reasons for appointment
Mr. Noriyoshi Torigoe has many years of experience working at a quasi-public lending institution, and possesses
ample experience and wide-ranging insights related toinfrastructure businesses. Mr. Torigoe assumed office as
Director in August 2020 and, by proactively voicing his
opinions and making suggestions regarding management
strategy proposals and agenda items, he is responsible
for the management of the Company.

Reasons for appointment
Mr. Masami Tashiro has many years of international
experience working at financial institutions and possesses ample experience and deep insights as a corporate manager. By taking an independent standpoint, andby communicating precise recommendations and opinions from a global perspective concerning all aspects of
the Company’s management, Mr. Tashiro properly supervises the Company’s management.

Representative Director,
President & Chief Executive Officer

Director, Senior Executive Officer,
Chief Financial Officer

Outside Director

Audit & Supervisory Board Member

Haruo Nagamatsu

Kensuke Waki

Reijiro Yamamoto

Chihiro UbukataTerm of office for Directors 5 years
Attendance at Board of Directors meeting 19/19 (100%)Term of office for Directors 4 years
Attendance at Board of Directors meeting 19/19 (100%)Term of office for Directors 3 years and 4 months
Attendance at Board of Directors meeting 19/19 (100%)

Reasons for appointment
Mr. Haruo Nagamatsu, having served the Company as
Unit Director of the Infrastructure Business Unit, as arepresentative of the Company’s overseas subsidiaries,
and as project manager for numerous projects, possesses
ample experience and deep insights related to projectand corporate management. Since assuming office as
Representative Director, President, and Chief Executive
Officer in April 2018, Mr. Nagamatsu has demonstrated
outstanding leadership.

Reasons for appointment
Mr. Kensuke Waki, having served the Company as headof the finance and accounting divisions, possesses ample
experience and deep insights related to finance andaccounting. Mr. Waki was appointed Chief Financial
Officer in April 2017, and Director and Senior Executive
Officer in 2018. In his role overseeing the finance andaccounting departments, he is responsible for the management of the Company.

Term of office for Audit & Supervisory Board Member
3 years
Attendance at Board of Directors meeting 19/19 (100%)
Attendance at Audit & Supervisory Board meeting
19/19 (100%)

ChairmanTomohisa Abe
Term of office for Directors 6 years
Attendance at Board of Directors meeting 19/19 (100%)

Senior Audit & Supervisory Board Member

Toshihiko Nemura
Newly Appointed
Reasons for appointment
Mr. Toshihiko Nemura has spent many years working in
the Company’s engineering departments and has also
served as Director at overseas companies, and as head of
the Mechanical Engineering Division, Solution Marketing
Department, and Internal Auditing Division; he possesses
ample experience and deep insights related to technologies, management, and internal audits.

Reasons for appointment
Having spent many years working as the head of theCompany’s finance division, Mr. Chihiro Ubukata possesses ample experience and deep insights related tofinance and accounting.

Outside Director
Independent Officer

Outside Audit & Supervisory Board Member
Independent Officer

Masayuki Yoshizawa

Tatsuya Terazawa

Kiyohito Uchida

Term of office for Directors 7 years
Attendance at Board of Directors meeting 19/19 (100%)Term of office for Directors 1 years and 11 months
Attendance at Board of Directors meeting 19/19 (100%)

Reasons for appointment
Mr. Masayuki Yoshizawa, having served at a general
trading company for many years, possesses ample experience and deep insights related to the business of theCompany, including investments in energy and infrastructure, the EPC business, and the management of overseas
corporations. Mr. Yoshizawa was appointed Director
and Senior Executive Officer at the Company in 2015,
Representative Director in 2016, and Executive Vice
President in April 2019. In his role overseeing businessreforms and project management, he is responsible forthe management of the Company.

Reasons for appointment
Mr. Tatsuya Terazawa, having served in the Ministry of
Economy, Trade and Industry (METI) for many years, possesses ample experience and deep insights related to
public policies, mainly in terms of trade policy and tradepromotion. By utilizing his experience and insights, andby communicating fair and precise recommendations andopinions from an independent standpoint, Mr. Terazawa
properly supervises the Company’s management.

Term of office for Audit & Supervisory Board Member
7 years
Attendance at Board of Directors meeting 19/19 (100%)
Attendance at Audit & Supervisory Board meeting
Reasons for appointment
Mr. Kiyohito Uchida possesses ample experience andextensive knowledge gained as a lawyer.

Accounting/financeHR/labor

Legal andregulatory

Technology/
R&D

Project
Management

Sales marketing

Industryknowledge

Knowledge ofother industries

19/19 (100%)

Tomohisa Abe

Chairman

Outside Director
Independent Officer

Outside Audit & Supervisory Board Member
Independent Officer

Haruo Nagamatsu

Representative Director President & Chief Executive Officer

Sayoko Miyairi

Hideki Matsuo

Masayuki Yoshizawa Representative Director Executive Vice President
Senior Executive Officer

Kensuke Waki

Senior Executive Officer

Masami Tashiro

Outside Director

Reijiro Yamamoto

Outside Director

Tatsuya Terazawa

Outside Director

Sayoko Miyairi

Outside Director

Toshihiko Nemura

Senior Audit & Supervisory Board Member

Chihiro Ubukata

Audit & Supervisory Board Member

Kiyohito Uchida

Outside Audit & Supervisory Board Member

Hideki Matsuo

Outside Audit & Supervisory Board Member

Term of office for Directors 1 years and 11 months
Attendance at Board of Directors meeting 18/19 (94.7%)
Reasons for appointment
Ms. Sayoko Miyairi possesses ample business andmanagement experience related to her consulting company work as well as professional knowledge and broad
insight as a university professor. By utilizing her experience and insights, and by communicating fair andprecise recommendations and opinions from an independent standpoint, Ms. Miyairi properly supervises theCompany’s management.

Newly Appointed
Reasons for appointment
Mr. Hideki Matsuo has engaged in management in thechemical industry, with which the Company has strong
connections, for many years, and possesses ample experience and deep insights related to management.

Data Section

Noriyoshi Torigoe

Foundation for Sustainable Growth

Representative Director,
Executive Vice President

Global corporate
management

Medium-term Management Plan

Reasons for appointment
Mr. Reijiro Yamamoto, who serves as the corporate manager of an investment fund management company andhas served as the corporate manager of various business companies, possesses ample experience and deep
insights related to finance and corporate management,
and properly supervises the Company’s management.

Management Vision

Directors

Note: the table above shows the specialized knowledge and experience held by Directors and Audit & Supervisory Board Members

46

TOYO ENGINEERING CORPORATION

Integrated Report 2022

TOYO ENGINEERING CORPORATION

Integrated Report 2022

47

GOVERNANCE
Establish an Organization with Integrity and Discipline

Outside Director’s Message

Management Vision

Responding to the mandate ofall shareholders and being aware ofasking pointed questions

Focusing on management processes
without being constrained byconventional wisdom within
the industry

Masami Tashiro

Reijiro Yamamoto

Tatsuya Terazawa

Sayoko Miyairi

Outside Director

Outside Director

Outside Director

Outside Director

One of the pillars of the “Advanced EPC operation” strategy in

TOYO is recognized by many people as not only an association of

The duty of outside directors is to supervise business execu-

Even for specialized, technical content and items that have alreadythe medium-term management plan is “the further advanced

professionals with many years of experience in projects but also ation as a proxy for shareholders. Therefore, it is important to “askbeen thoroughly debated by bodies such as the management

group operations.” One KPI is increasing group companies’ shareglobal engineering company knowledgeable of international soci-pointed questions." In addition to asking about points that aremeeting, I do not hesitate to ask questions about points of con-of consolidated gross profit to 50%, but of course, it is import-

ety and culture. As for the global trend toward sustainability andof interest to shareholders, I ask questions regarding importantcerns and state my opinion regarding items such as basic ques-

ant to spread governance to group companies as efforts are made

ESG, there are growing expectations that TOYO will contribute to

management decisions to confirm that “points that should betions, even if they are conventional wisdom within the industry,

to increase earning. To further invigorate the business of overseas

the realization of carbon neutral society.

pushed are pushed.” If I receive convincing answers to my ques-

and evaluations from an investor perspective. In particular, I am

tions, I vote for the resolution, but if I do not, I demand that a nec-

interested in the management process so that the medium-term

essary response be taken.

management plan and objectives of related measures are prop-group companies, a traditional strength of TOYO, we are not only

Under these conditions, all projects entail risks, and thus, astrengthening various organizations and systems every year but

governance system is extremely important. At Board of Directors

also gradually developing the direct approach on them through themeetings, there are lively debates during which the follow-

I truly feel that because the Board of Directors includes out-

erly communicated to employees and the plan can be imple-

Board of Directors. In particular, we are increasing opportunities foring types of questions are asked. Are projects that make use

side directors with diverse backgrounds, various perspectives

mented with a sense of understanding. As much as possible, I

the local top management to participate via the Internet in Boardof TOYO’s strengths related to technology, regions, and clientsare presented and there is a lively debate at meetings. This pro-also observe activities such as in-house explanatory meetings.

of Directors meetings at which the group company is a topic ofstrategically selected? Are there examinations and negotiations

cess makes it possible to limit major risks. Furthermore, in addi-

I recognize that TOYO’s corporate governance guidelines anddiscussion.

regarding schemes and agreements so that TOYO does not taketion to checks that limit negative developments, the issue now isgovernance system have been built up over the years within a par-on an amount of risk that it cannot bear? Is there appropriate tech-

positive contributions that result in a stronger system and added

ticularly historical context, and I think that issues are sufficiently

nical, financial, and legal management and supervision while proj-

value provided by new businesses.

debated at each stage and from various perspectives, which is par-whole TOYO group, not simply the pros and cons of a particularects are being executed? Are the terms of tie-up and collaboration

project.

agreements and the corresponding executing entity managed?

I expect that TOYO will contribute to ESG through products

ticularly true for risks, and that deliberations to form agreement aresuch as ammonia. In addition to that, I consider it my role to fur-carefully undertaken without worrying about sending issues back.

ther draw out TOYO’s latent powers. I want to work even harderAs for ESG management, a shift to technical fields that can be

As global issues, such as COVID-19, arise one after another, I

Having served as an outside director for three years, I work to col-am confident that we can contribute to international society andlect information both inside and outside the company and am con-play an active role through world-class technology by having inde-

fident that I will make contributions through my advice provided by

and TCFD-related initiatives is extolled in the medium-term manage-

pendent group companies capture local needs and fully taking

opportunities such as in-house lectures and in-house magazines. I

ment plan. Regarding governance, the opinions of outside directors

group governance into consideration.

expect that TOYO will make use of this period of massive changes inare seriously listened to the Board of Directors run in an open man-the industry and continue to grow and increase its corporate value.

ner. Human resource development and improving the work-engage-

to meet the mandate of shareholders.

Data Section

We do all that we can to use these opportunities to directly
communicate the message of corporate governance for theFoundation for Sustainable Growth

Helping increase corporate value
by capturing a period of massivechanges while paying attention toproject risk management

Medium-term Management Plan

Focusing on reinforcing corporate
governance throughout
the TOYO Group

expected to contribute to the overall industry through environmental

ment are issues that need to be deal with in the future.

48

TOYO ENGINEERING CORPORATION

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Integrated Report 2022

49

GOVERNANCE
Establish an Organization with Integrity and Discipline

Corporate Governance

Company with an Audit & Supervisory Board

sustainability as a company and improved corporate and shareholder value in the medium- to long-term. We

Adoption of an executive officer system

Yes

are also working on fleshing out our corporate governance, which we consider the foundation for achieving theVoluntary committee of the Board of Directors

Nomination and Remuneration Advisory Committee

above. More specifically, we are doing everything in our power to establish and run a corporate governance system, implement suitable risk-taking management, ensure thorough compliance, actively disclose information,

Average attendance rate of Outside Directors 97.3%
Outside Audit & Supervisory Board Members 97.3%

Number of Audit & Supervisory Board
meetings*

19

Outside Audit & Supervisory Board Members 100%

Appointing Outside Directors

Appointing Outside Auditors

Remuneration for Directors and Audit &Supervisory Board Members

Directors (excl. Outside Directors): fixed remuneration and performancelinked remuneration
Outside Directors and Audit & Supervisory Board Members: fixed remuneration

We appoint Outside Directors who possess superb insight

We appoint Outside Auditors who possess superb insight andand abundant experience in various fields, including man-abundant experience in various fields. They are able to takeagement of global corporations, accounting and finance,

an overview of our entire management and properly audit the

Audit firm

Ernst & Young ShinNihon LLC

human resources management, and legal affairs. They areadequacy of the work and business execution of our Directors.

Medium-term Management Plan

19

Number of Board of Directors meetings*

and maintain a dialogue with our stakeholders.

Initiatives to Strengthen Governancei

Management Vision

Form of organization

TOYO’s mission is “Engineering for Sustainable Growth of the Global Community.”, and we aim to achieve both

*FY2021

able to take an overview of our entire management and provide practical and objective opinions and advice from theOutside Officer Systemperspective of diverse stakeholders. In line with the criteria

Our Outside Officers provide opinions from the perspective offor the independence of outside directors prescribed by theexternal stakeholders, and we believe this both helps ensure

Tokyo Stock Exchange, three of our four Outside Directors

the accountability of our corporate executives and contributes

are Independent Officers.

to management transparency. Considering the business con-Past Initiatives to Strengthen Corporate Governancei
Appointment of four Outside Directors(increased from three to four)tent and structure of our company, we are confident that ourcurrent Outside Officer system is effective in ensuring our cor-

In fiscal 2020, we appointed a new female Director. Going

porate governance functions as intended. In addition, to makeforward, we will continue our efforts to ensure the diversity

sure that our Outside Officers provide effective supervisionof the Board of Directors, including aspects such as gender,for our corporate management, we provide explanations ofnationality, career history, and age.

agenda items in advance of Board of Directors meetings, with

Appointment of one
Outside Director

2021
2019

Establishment ofCode of Conduct andCompliance Program

the goal of elevating the quality of meeting discussions.

2018
2017

Corporate Governance Structure (as of July 1, 2022)
Total

Internal
Directors

Establishment of Nomination
and Remuneration Advisory
Committee

Revisions to Corporate
Governance Guidelines

2015

Outside Directors(of which, Independent Officers)

Audit & Supervisory
Board Members

Outside Auditors(of which, Independent Officers)

Chair

Board of Directors

13

5

4(3)

2

2(2)

Chairman of the Board of
Directors

Audit & Supervisory
Board

4

—

—

2

2(2)

Senior Audit & Supervisory
Board Member

Nomination andRemuneration Advisory
Committee

4

1

3(3)

—

—

President & CEO

Foundation for Sustainable Growth

Ensuring the diversity of the Board of Directors

2014
2008

Establishment of Compliance Department
Revisions to Corporate Governance Guidelines

2006
2003

Appointment of Chief Compliance Officer
Appointment of three Outside Directors (increased
from one to three)
Formulation of Corporate Governance Guidelines

Adoption of executive
officer system

Establishment of Compliance
Committee

Composition of the Board of Directors

OutsideDirectors:

44.4%

Internal
Directors

1 female Director

4 Audit & Supervisory Board Members

FemaleDirectors:

Outside Audit &Supervisory
Board Members:

11.1%

OutsideDirectors

50%

FemaleIndependent Directors: 33.3%

50

TOYO ENGINEERING CORPORATION

Integrated Report 2022

Independent Officers: 50%

Internal Controlsi
Based on the recognition that internal controls serve as thereliability of compliance, risk management, and financial

foundation of corporate governance, the Directors establish,

reports, we also pay sufficient attention to the effectivenessmaintain, and evaluate an appropriate internal control sys-and efficiency of operations. The establishment of this sys-tem. They conduct ongoing inspections and make improve-

tem enables the Board of Directors to make decisions basedments to the system and periodically review their basic policy

on appropriate information and subsequently, the execution

for internal controls. Given that internal controls ensure theof business.

TOYO ENGINEERING CORPORATION

Integrated Report 2022

Data Section

9 Directors

51

GOVERNANCE
Establish an Organization with Integrity and Discipline

Corporate GovernanceDiscussions by the Board of Directorsi

TOYO recognizes the importance of ensuring transparency andbody to the President & CEO and consists of Executive Officers

The primary topics of discussion by TOYO’s Board of Directors

issues, which take TOYO’s unique characteristics as an engi-

fairness in management decision making in gaining the trust ofwith specific roles (Senior Executive Officers or above) andare: medium- and long-term management plans and financ-neering company into consideration.

its stakeholders, including shareholders and customers, andthe heads of key divisions. The Executive Committee reports

ing plans; and basic policies and risk management for priority

fulfilling our corporate social responsibilities. We have estab-on and deliberates important matters related to the execu-

lished the following corporate governance system and aretion of operation. The Nomination and Remuneration Advisory

working to further expand its operation. The Board of Directors

Committee also serves as an advisory body to the President

comprises nine Directors, including four Outside Directors,& CEO—its members comprising the President & CEO andwho deliberate and determine all important matters related to

Outside Officers. The Committee serves to ensure fair andmanagement and execution of operation, and also monitor andtransparent officer appointments and remuneration by provid-

supervise one another with respect to the execution of duties.

ing opinions to the President & CEO. The Audit & Supervisory

We also employ an executive officer system for the purpose of

Board consists of four members, two of which are Outside

guaranteeing a swift and efficient business execution system.

Auditors. They report and deliberate on the execution of duties

Executive Officers are appointed by the Board of Directors and,by Directors, the establishment and implementation of inter-

under the CEO’s directions, execute the duties they have been

nal controls, internal audit guidelines for quarterly and year-end

delegated. The Executive Committee serves as an advisory

results, and the details and results of audits.

Board of Directors
Appointment/Removal

President and CEO

Appointment/Removal
Audit

Audit & Supervisory Board (Members)

Appointment/Removal
LiaisonAccounting Auditor

Audit

LiaisonNomination and Remuneration
Advisory Committee

ReportSustainability Committee
Crisis (Disaster) Headquarters
Crisis Management OfficeCompliance Committee
Project Risk Management Committee

Internal Auditing Division

Group Management Division

Group Companies

Auditing by Internal Auditing Division and Audit &Supervisory Board Membersi

52

employees on the status of operations and the execution of

directly controlled by the President. Internal Auditing Divisionduties, and investigating the progress of the Company’s opera-

assesses the legality and rationality of Company operations,tions and finances. The Audit & Supervisory Board, Accounting

and provides advice and counsel regarding the operational

Auditors, and the Internal Auditing Division conduct their audit-

effectiveness and efficiency of the Company. Additionally,

ing in cooperation, while giving full consideration to the inde-

it independently assesses the maintenance and operation

pendence of one another. Auditing is implemented throughof internal controls related to financial reports, and theseclose communication such as explaining the observations

results are reported to the J-SOX Committee, the organiza-

related to the Company’s operations, and exchanging opin-

tion immediately under the President. Audit & Supervisoryions on various topics including their respective yearly audit-

Board Members audit Directors’ execution of duties throughing plans and critical audit items, auditing methods, inspection

attending important meetings, including those of the Boardand quality control systems, and audit results.

TOYO ENGINEERING CORPORATION

Integrated Report 2022of evaluating the efficacy of the Board of Directors. Analysis,

and discloses a summary of the procedures and results

discussion, and evaluation based on these results were con-thereof. In December 2021, we conducted a survey of allducted in the February 2022 regular Board of Directors meet-of the Directors and Audit & Supervisory Board Members

ing. Below are the main points of those results.

that make up the Board of Directors. The Board of Directors

Issues requiring improvement in fiscal 2019 and before• The future appointment of female and non-Japanese officers ought to be discussed• The shift to paperless (digitalization) for Board of Directors meeting materials ought tobe promoted

Fiscal 2020
Improvements made in response toissues raised in fiscal 2019:• Appointed female Directors, and worked
to ensure diversity of Board of Directors• Completed shift to paperless (digitalization) for Board of Directors meeting
materials• Achieved swift distribution of electronicmaterials

Issues requiring improvement:• The impact of COVID-19 has reduced
opportunities for face-to-face meetings, resulting in lower frequency ofcommunication• Board
of Directors meetings are excessively long

Fiscal 2021
Improvements made in response toissues raised in fiscal 2020:• Increased opportunities for officers to
exchange information and share opinions through the use of video conferencing systems and, as circumstances allow,
the gradual incorporation of face-to-face
discussions• Some improvements made to the lengthof Board of Directors meetings, throughadvance explanations of agenda items
and careful time management by the
Chairman

Issues requiring improvement:• Inspections of overseas worksites havenot been carried out, and opportunities
for communicating with these projectsites have diminished• Further discussions are required
regarding successor development andfurther utilizing the Nomination andRemuneration Advisory Committee

Data Section

TOYO has established an Internal Auditing Division that isof Directors, interviewing Directors, Executive Officers, andreceived a report of the results from the Director in charge

TOYO regularly evaluates and analyses the Board of Directors

Audit

Supervise

Operation Units

In order to improve the efficacy of the Board of Directors,

Foundation for Sustainable Growth

J-SOX Committee

Executive Committee

Evaluation of Effectiveness of the Board of Directorsi

Medium-term Management Plan

Shareholders Meeting
Appointment/Removal

Management VisionCorporate Governance Systemi

Future initiatives:• If COVID-19 allows, we will provide opportunities to inspect project sites at overseas
Group companies; we will also work to create opportunities for active exchanges of
opinions at various levels, including at project sites• We will review the content of Nomination and Remuneration Advisory Committee
meetings and enhance opportunities to provide information regarding human capital toCommittee members

TOYO ENGINEERING CORPORATION

Integrated Report 2022

53

GOVERNANCE
Establish an Organization with Integrity and Discipline

Compliance

Policies on Remuneration Amounts and Determining Calculation Methods for
Directors and Audit & Supervisory Board Members

Basic Policy on ComplianceI

Furthermore, in order to set appropriate remuneration levels

Directors) is intended to be suitable, fair, and balanced andfor Directors and Audit & Supervisory Board Members andto increase their motivation to maximize the Company’s cor-strengthen accountability, the ratios for both fixed and perfor-

porate value while ensuring medium- to long-term profit formance-linked remuneration as well as the calculation formula

shareholders. More specifically, this remuneration consists

for performance-linked remuneration shall be decided by theof a fixed portion—determined according to each Director’s

Board of Directors based on the findings of the Nomination

position— and a performance-linked portion. The perfor-

and Remuneration Advisory Committee—which consists ofmance-linked remuneration is calculated based on the current

the President & CEO and Outside Officers—after discuss-

net profit attributable to owners of the parent—which is con-ing any revisions deemed necessary by the President & CEO.

sidered the most suitable indicator that reflects the Group’s

Remuneration for Outside Directors and Audit & Supervisorybusiness performance—and is determined by the President

Board Members is fixed and not linked to business perfor-& CEO according to the level of contribution of each Director.

mance in light of their roles and independence.
(FY2021)

Officer Classification

Total Remuneration by Type (¥ million)

Total
Remuneration(¥ million)

Fixed
Remuneration

Performance-Linked
Remuneration

Number of
Eligible Officers

Directors (excluding Outside Directors)

130

130

—

5

Audit & Supervisory Board Members (excluding
Outside Audit & Supervisory Board Members)

38

38

—

2

Outside Officers

36

36

—

6

requires that every member of our workforce not only complies with national and international laws, regulations,and rules, but also abides by the spirit of these rules in the execution of their day-to-day work; it further requires that
employees improve the integrity and ethical values of the Company by acting in conformance with our Corporate
Philosophy and by acting with social decency.
Through the initiatives outlined below, we will strengthen the operation and monitoring of our management systems in line with this Basic Policy.

Commitment by
the Top Management

Internal Whistleblowing System

We recognize that the commitment by the top management

pliance such as the violation of laws, regulations and others

toward the maintenance and strengthening of complianceas a system to ensure appropriate reporting to the Board ofis important. President and CEO annually issues a message

Directors and the Audit & Supervisory Board. For this pur-that appeals the importance of compliance to Directors andpose, we establish points of contact for consultation andemployees of the whole Group Companies.

internal whistleblowing in and outside of the Company for

Codes and Manuals
To ensure that the execution of duties complies with laws
and regulations, we formulate Code of Conduct, Compliance

We develop internal whistleblowing system concerning com-

executives and employees of all group companies, and also
develop internal rules to strictly prohibit any disadvantageous
treatment of those who provided such information.

Manual, and other related rules. Furthermore, all Directors,

Training on Compliance

Executive Officers and employees annually submit written

We endeavor to boost awareness about compliance with pro-oaths and comply with them.

motion activities by implementing group training, e-learning,mini tests and in-company lectures on compliance.

TOYO established the Nomination and Remuneration Advisoryof Directors and Executive Officers. The Nomination andCommittee as an advisory body to the President & CEO, with

Remuneration Advisory Committee meets once per year inCompliance Committee

the goal of ensuring transparency in various areas: the nom-principle, with additional meetings held as required.

We organize the Compliance Committee headed by Chief

Approach to the Bribery Risk

The Nomination and Remuneration Advisory Committee

Compliance Officer (CCO), and endeavor to operate and mon-We are working to enhance and expand our program for pre-appointment and dismissal of the Representative Director;

comprises a total of four members: the President & CEO, whoitor the educational and promotional campaigns on compli-

venting the bribery of foreign public officials. We establish

the appointment and dismissal of executives; and the sys-is Committee chair, and three Independent Outside Directors.

ance and the compliance system in the following procedures.

Compliance Committees at respective group companies and(1) The Compliance Committee plans the educational and pro-assign their persons responsible to ensure the deployment of

motional campaigns out, which is executed mainly by the

integrated compliance activities as TOYO Group, and estab-Compliance Department, which is its Secretariat, and thelish a system to facilitate constant exchange of opinions withdivision/department heads.

our Compliance Department.

ination of Director and Executive Officer candidates; thetems and decision-making processes for the remuneration

Items discussed by the Nomination and Remuneration Advisory Committeea) Items related to Nominationsb) Items related to Remuneration

1. Director appointment and dismissal proposals submitted to

1. 
The remuneration system for Directors and Executive

the General Meeting of Shareholders

Officers
2. 
Breakdown of compensation, including compensation

3. Appointment and dismissal of executives: Chairman,

amounts, for individual Directors and Executive Officers

President, Vice President, Senior Executive Officers, CEO,3. Inquiries from the President & CEO regarding the remuner-

4. Developing successors to the President & CEO and other
Directors and to Executive Officers
5. Inquiries from the President & CEO regarding the nomination of Directors and Executive Officers: the selection
process for officer candidates, eligibility requirements forofficers, evaluation criteria, etc.

TOYO ENGINEERING CORPORATION

Integrated Report 2022

ation system for Directors and Executive Officers: remuneration methods, calculation methods, remuneration tables,etc.

(2) Division/Department heads arrange and confirm the laws
and regulations to comply with in their execution of duties,

Compliance Audit

develop and revise the work procedures and check lists,

Audit & Supervisory Board Members audit the execution ofand strive to fully comply with them.

duties by Directors regularly and from time to time, whether(3) The Compliance Committee receives reports on compliance

there is any major fact that violates any laws, regulations andviolation cases and reviews the situation to cope with them.

the Articles of Incorporation, and whether the business deci-(4) The Compliance Committee confirms and evaluates thesion made by the Board of Directors and others is fair from thestate of execution of the above, and the CCO periodi-

viewpoints of good manager’s duty of care and duty of loyalty

cally reports the results to the Board of Directors and theof Directors or not. Audit & Supervisory Board Members andExecutive Committee. The Board of Directors, based on theInternal Auditing Division also audit the situation of compli-

reports, annually conduct a management review.

ance of each department and report the results to the Board

Data Section

2. Appointment and dismissal of the Representative Director

CFO, CCO, and CTO

54this mission is the best way of fulfilling our corporate social responsibility. To this end, our Basic Policy on ComplianceFoundation for Sustainable Growth

Nomination and Remuneration Advisory Committeei

TOYO’s stated mission is “Engineering for Sustainable Growth of the Global Community.” We believe that realizing

Medium-term Management Plan

Remuneration for TOYO’s Directors (excluding Outside

Management VisionCorporate Governanceof Directors and others.

TOYO ENGINEERING CORPORATION

Integrated Report 2022

55

GOVERNANCE
Establish an Organization with Integrity and Discipline

Risk Management

Basic Policy on Risk Management I
At TOYO, we believe that appropriate risk-taking and effective risk management are essential to improving cor-

Pre-order (proposal selection and estimation stages)

porate value; for this reason, we identify potential risks—such as changing business environments—in all our busi-

For each project we undertake, we examine the technologies and work involved, we understand and assess the risks involved,

ness processes. We clearly define which processes we use to classify, analyze, assess, and respond to these risks;

we consider the potential impact and probability of occurrence of these risks, and we draw up rational countermeasures. To facil-

which departments that are tasked with overseeing these processes; and which relevant regulations we adhere to.

itate the above risk management initiatives, to ensure they are formulated in a transparent manner, and to verify the efficacy ofIn order to understand and respond to latent risks as quickly as possible, every fiscal year, we review our risk man-

their risk control functions, we have established and operate the system outlined below.

agement processes, identify priority risks, and manage these risks accordingly. As an engineering company, we
intend to continually build on our past experiences to enhance our risk management capabilities and handle risks
in an appropriate manner.

Strengthening Pre-Order Risk Management

For projects that are large, important, or novel

Discussing our initiative policy and strategy for each project andanalyzing risks at a strategy policy meeting
The Board of Directors determines the advisability of starting proposal activities

Group’s important know-how. We have established a Basic Policies
on Information Security and are working on it.

As globalization progresses, so diverse risks are increasing in fre-

Information Security Risk Management Systemquency. These include: COVID-19 and other infectious and non-in-

We have obtained ISO/IEC 27001 certification, the international

fectious diseases, terrorism and other serious crimes, disorders

standard for information security management systems, in 2006

and disturbances, natural disasters, and traffic accidents. We are

and have maintained this certification until now. Based on thisworking to minimize the adverse impacts of such risks on ourmanagement system, we are implementing and improving infor-

operations by accurately understand conditions on the ground andmation security.

carefully implementing safety measures and appropriate risk man-

• Execution system considerationIntra-Group formation, PM/key person/resource
partner screening and formation• Detailed examination ofcontract requirements

Required deadline
Critical path of schedule• Risk consideration and countermeasure policy planning
The Board of Directors approves the risk management policy.
Assessing the suitability at a cost appraisal meeting and schedule appraisal meeting
The heads of business divisions approve the price• Project novelty and special
characteristics• Contract conditions• Client credibility• Partner capabilities, experience,resources, and reliability• Risk sharing with the client or partner• TOYO Group resources (execution
system)• Country risk (political, economic,
exchange, tax system, public security,
infrastructure, etc.)

agement for our employees and partners both in Japan and over-Protection of Personal Informationseas. At TOYO, we operate on the principle of safety first. Our goal

In accordance with Japan’s Law Concerning the Protection ofis to wholly eliminate incidents and accidents occasioning harm

Personal Information, TOYO has established a Privacy Policy andto any of our employees or partners. To this end, we are imple-

appropriately handles the personal information it holds. We havementing appropriate safety measures and making preparations toalso established the GDPR Privacy Policy and are working to comply

swiftly and appropriately respond in case an emergency shouldwith the GDPR (EU General Data Protection Regulation).

Our project risk management comprises two main components: first, the approval of project execution policies which, as part of their

Risk Management of Group Companies

and improvement of project profitability through the implementation of appropriate risk control systems, including regular report-

In order to achieve our goal of zero incidents or accidents
occasioning harm, we are focused on providing instruction to our

We implement the risk management of the Group Companies

employees and partners in the form of educational activities and thethrough a series of activities as follows:

provision of precautionary information, so that they recognize that(1) We establish Group Company Management Rules and clarify

they are ultimately responsible for their own safety.

Business Continuity Planning

the authority and responsibilities of each of them. Based on thesaid Rules, we require the acquisition of prior approval or reporting from the Group Company to us on predetermined matters.

We have formulated the Internal Rules for Crisis Management to(2) We develop and operate compliance systems of our Group as a

respond to crises that pose a risk to the continued existence of thewhole, taking compatibility with local laws and regulations. With

Company. These Rules cover major earthquakes, natural disasters

regard to efforts for ensuring the reliability of financial reports andsuch as storms and floods, fires, terrorist acts, riots, disruptions tofull observation of security trade control system, the divisions

information systems, pandemic influenza, accidents, and infectious

and departments concerned cooperate for the achievement.

diseases. We have also formulated specific business continuity(3) Group Companies establish their risk control systems and crisis

plans for global pandemics of infectious diseases and major earth-control systems, respectively.
(4) Group management and administration divisions require Groupble of providing concrete instruction through the establishment of aCompanies to periodically report on their execution of business

Crisis Response Division, headed by the President & CEO, throughoperations and financial conditions, and conduct the adminis-

the use of predefined criteria for selecting priority work processes

tration and control in a planned manner in cooperation withand through the implementation of prearranged recovery plans.

Internal Auditing Divisions, Finance and Accounting Divisions

Information Security Risk Management(5) We establish an appropriate control system for equity-method

and Audit & Supervisory Board Members.

We recognize that it is our important responsibility to protect

affiliates in proportion to their equity and the responsibility

information that must be protected in accordance with laws andto assume, and the Group Management and Administration

regulations, such as contracts with customers and business part-

Divisions carry out the administration.

ners and the Personal Information Protection Law, as well as the

TOYO ENGINEERING CORPORATION

Integrated Report 2022

Post-order (project execution stage)risk control systems, incorporate risk assessments and preconditions from the pre-order proposal stage; second, the maintenanceing and monitoring throughout the duration of the project. To this end, we have established and operate the system outlined below.

Strengthening Project Risk Management
After order receipt
Implementing a reliable transfer from proposal activities to the project itself
At the time starting the project

Risks to be considered

Drafting a clear execution policy and making everyone aware of it• Weather and disasters

During project execution• Weekly and monthly management as well as reviews by division heads• Ensuring the design and procurement that considering construction and operations• Strengthening construction management• Implementing a Cold Eye Review by in-house experts• Early detection of and response to predictors of trouble• Drafting and executing early measures to respond to trouble• Implementing steering from a high-level perspective• Regularly holding meetings to report to the management• Sharing important risks and countermeasures with other projects in progress• Partner capabilities• TOYO Group resources• Increases in the quantity of materials
and equipment or associated construction work
• Risks of construction period delays
or failing to achieve performance
guarantees

Data Section

quakes. Should such crises arise, we will establish systems capa-• Schedule

The President, Executive Vice President, and CFO approve and submit the final offer.

Foundation for Sustainable Growthmaterialize.

56

Proposal Activities and Cost Estimating

Risks to be considered

Medium-term Management Plan

Safety and Risk Management inJapan and overseas

Management Vision

Project Risk Management• Country risk (political, economic,
exchange, tax system, public security, infrastructure, unions, etc.)

After the project ends
Implementing reliable feedback• Analyzing job data via risk category classification and providing feedback• In-house sharing of project trouble examples at job close-out report meetings

TOYO ENGINEERING CORPORATION

Integrated Report 2022

57

GOVERNANCE
Establish an Organization with Integrity and Discipline

Safety, Quality and Environment (SQE) Initiatives

Initiatives to strengthen the quality management system in order to reduce costs of quality-related losses

TOYO and its group companies have established the basic policy (https://www.toyo-eng.com/jp/
en/company/policy/safety/index.php) based on the recognition that compliance with laws and regulations related to HSE and quality as well as meeting the requirements of customers and society,is an indispensable prerequisite for operating business and fulfilling our social responsibilities as acompany and have pursued the realization of the policy under the following management structure.

Safety, Quality, and Environment (SQE) Management Structure
TOYO Group Companies

SQE Management Committee at Head OfficeThoroughly review and continuously improve basic operations
Direction forimprovement

Direction

ReportingContinuously improve theManagement System, the global
common foundation

Strengthen solidarity among groupcompanies

Divisions and Departments at
Group Companies

Direction

SQE Promotion
Committee(Division HeadLevel)
Held 4 times/year

ReportingDirection forimprovement

Safety, Quality and Environment
Management Division• HSE Management Department• Quality Management Department

SQE Division at Group Companies
Monitoring and auditing

SQE Committee(Officer andGeneralManager Level)
Held 4 times/year

Monitoring and auditing
Divisions and Departments at
Head OfficeGroup HSE/Quality Meeting

Single Project at Group Companies

Single Project at Head Office

Local Standards (LS)+ISO14001/ISO27001/ISO45001

Local Standards (LS)+ISO14001/ISO27001
Global Standards (GS) + ISO 9001 Certification (the TOYO Group)

ISO 9001: Quality Management System, ISO 14001: Environmental Management System, ISO 27001: Information Security Management System, ISO 45001: Occupational Health and
Safety Management System*Global Standards and Local Standards: Standards used by the entire TOYO Group were unified as Global Standards in 2008 so that all group companies would operate using the same
management criteria. TOYO Group obtained ISO9001 group certification for its unified group operation in 2013 and still maintains it. On the other hand, Local Standards are applied aswork standards for individual group companies when they execute domestic projects based on the laws, regulations, etc. of the country the company is located.
*Group HSE/Quality Meeting (strengthening solidary among group companies): A meeting that brings the HSE/quality managers of the various group companies together under one
roof to build a consensus and promote improvements through lively communication. Group companies actively make proposals, which leads to better management.

Evolution to Advanced Global Standards through Collaboration with
Various Group Companies
The medium-term management plan touts “advanced group operations,” and we are undertaking initiatives to create a system inwhich each group company plays a central role in executing EPC
projects. The Safety, Quality and Environment Management Division

2025
Advanced Global Standards

Present
Group
companiesGroup
companiesGroup
companies

damental reforms to the workflow using DXoT. The Safety, Quality
and Environment Management Division plays a leading role in thisevolution by “strengthening solidary among group companies,” andwe are aiming to build mechanisms and systems that can ensure
even greater HSE and quality at all group companies.

58

TOYO ENGINEERING CORPORATION

Integrated Report 2022

Make it possible to naturally accumulate andsummarize information on project problems andfeedback and to easily use that information
Make use of knowledge(when jobs start)

Use AI to help detect risks and prevent missed items when conducing
ITB Review

Use knowledge
for proposals

Input ITB

Respond to new problems(during jobs)

ITB Review

Transform it into knowledge(when jobs are completed)

ITB Review
Knowledge
accumulation

SafetyTo ensure safety, the foundation of business activities, TOYO
has simply and honestly undertaken various efforts over theyears, and these have included strengthening safety leadershipof management, fostering a culture of safety, and formulating
and adhering to safety standards. For example, as we strive
to have zero occupational accidents, we continue to work to
The TOYO Group’s safety record over the last 10 years

improve safety activities while using lost time incident rate andtotal recordable incident rate as management indicators. As aresult, TOYO has maintained some of the lowest lost time incident rates and total recordable incident rates in the industry.
The following is safety record data for the past ten years, which
includes overseas group companies.

LTIR*1

TRIR*2(ILO basis: Incidence rate per million hours worked)

(%)

(%)

Total fatalities and losttime incidents (B)Total recordable
incident (B + Medical
treatment) (C)

0.5

2.0

11
7
7
5
3
4
11
3
3
3

27
23
20
14
26
35
38
14
23
19

Year

Man-hours
(A)

2012
2013
2014
2015
2016
2017
2018
2019
2020
2021

120,760,052
105,164,018
89,777,237
67,308,769
52,540,748
76,493,784
102,817,669
46,642,608
44,895,756
59,524,567*1 Lost time incident rate (LTIR) = (B) x 1,000,000 / (A)(B) = Fatalities + Lost time incidents*2 Total recordable incident rate (TRIR) = (C) x 1,000,000 / (A)(C) = (B) + Medical treatment

0.4
Construction industry
average

0.3

1.5

1.0
0.2
0.1

KPI

TOYO

0
(Year)

TOYO

0.5

0
12 13 14 15 16 17 18 19 20 21(Year)

12 13 14 15 16 17 18 19 20 21Note) Source of reference for construction industry average: IOGP safety performance indicators- 2020 data “Contractor”

Opinion of manager responsible for safety at overseas group companies
Overcoming COVID-19 and successfully completing projects through safety andquality managementtion of our projects throughout the world. We will be sure to executeGroupcompanies

Toyo-Japan“advanced EPC operation” strategy, and particularly in regard to (2),the goal is the evolution to Advanced Global Standards through fun-

ITB Review

Group
companiesGroup
companiesGroup
companies

Data Section

the global common foundation” as priority measures within the

New Feedback Knowledge
Management System

COVID-19 has had a major impact on the safe and high-quality execu-

touts (1) “thoroughly review and continually improve basic operations” and (2) “continuously improve the Management System,“organization knowledge.” We are touting the goal of reducing
fiscal 2025 quality-related losses by 50% compared to fiscal
2019 through these efforts.

Foundation for Sustainable Growth

Collaborative Project

Improving productivity for construction projects has been an
issue for the industry for many years, and there are research
reports that state 40% of investment costs are wasted. At
TOYO, too, there is wasted work for various reasons, suchas drawn-out negotiations, coordination of orders of equipment and other items, processing of claims, coordination atconstruction sites, and additional orders, and response to latedelivery of equipment and materials.
To reduce wasted costs and time, we released and updated
the following systems, which are some of the results for fiscal 2021, and worked to further strengthen the quality management system (evolution to Advanced Global Standards)
by fundamentally reforming the workflow through DXoT. We
will reduce unnecessary costs and time by implementing acycle that continues to transform “personal experience” into

Medium-term Management Plan

SQE Management Committee at Group Companies

Head Office“Advanced EPC Operation”
Strategy Priority Measures

Management Vision

Quality

Basic Policy

projects by ensuring robust safety and quality of the same level as
All group companies
TOYO Quality

DXoT empowered
Common HSEMS
Common QMS & ISMSHSEMS : Health Safety Environment Management System
QMS : Quality Management System
ISMS : Information Security Management Systemthat of before the pandemic by not only formulating response guidelines and health standards based on the abundant project experienceand knowledge possessed by TOYO but also thoroughly implementing those at all locations, from construction sites to the Head Office. While there are various constraints, we will undertake advanced safety and quality management by applying the latest digitaltechnology to all business activities, including remote quality management when manufacturing equip-

Taramaraju
Ponnusamy
Toyo-Malaysia
GM Q-OSHE Division

ment and site safety audits and inspections using drones.

TOYO ENGINEERING CORPORATION

Integrated Report 2022

59

ESG Data
Toyo Engineering Corporation and Consolidated Subsidiaries

Industrial waste recycling rate
(Domestic construction sites)

SocialFiscal 2021

Fiscal 2017

Fiscal 2018

Fiscal 2019

Fiscal 2020

(fiscal year ended
March 31, 2018)(fiscal year ended
March 31, 2019)(fiscal year ended
March 31, 2020)(fiscal year ended
March 31, 2021)

96%

91%

91%

(fiscal year ended
March 31, 2022)

90%

Male
6,794t10,160t

10,262t

9,992t

8,717tIndustrial waste volumes (Overseas)*1

19,608t

35,698t

13,805t

37,963t

6,557t

141t

129t

95t

58t

63t

0

0

0

0

3,567t

4,518t

9,277t10,068t

12,784t

4,264MWh

10,571MWh

10,438MWh

9,375MWh

9,757MWh

Electricity usage at domestic andoverseas construction sites*4—

2,852MWh

Water use (Head Office)30.2 thousand m3

27.8 thousand m3

27.2 thousand m3

18.5 thousand m3 18.2 thousand m3

Rainwater use

3.9 thousand m3

2.9 thousand m3

4.4 thousand m3

3.1 thousand m3

4.0 thousand m3

39.9t

29.6t

28.8t

18.2t

16.9t

(fiscal year ended
March 31, 2018)(fiscal year ended
March 31, 2019)(fiscal year ended
March 31, 2020)(fiscal year ended
March 31, 2021)(fiscal year ended
March 31, 2022)

No. of compliance e-Learning participants(for new recruits and employees yet to complete
the program)

—

62

33

66

69

Total no. of mini compliance test participants

—

961

790

2,298

2,404

Internal reporting

—

16

8

4

9

0

0

0

0

Governance-related data
7

5

5

5

5

Outside Directors

3

4

4

4

4

Audit & Supervisory Board Members

2

2

2

2

2

Outside Audit & Supervisory Board Members

2

2

2

2

2

*1 Calendar year (January–December) *2 For fiscal 2017, domestic Head Office (fiscal year); for fiscal 2018, the total for domestic Head Office (fiscal year) and overseas group companies (calendar year); for fiscal 2019 and after, the whole Group, including domestic and overseas construction sites (calendar year) *3 Same as for fiscal 2018 and earlier*2; calendar
year for fiscal 2019 and after *4 Began calculating in fiscal 2019 (calendar year) *5 Excluding temporary employees *6 Main EPC companies, which include equity method companies*7 Number of managers with a position equivalent to team manager or general manager *8 Lost time incident rate (LTIR) = total lost time incidents x 1,000,000 / man-hours*9 Total recordable incident rate (TRIR) = number of recordable incidences x 1,000,000 / man-hours *10 As of June 1 of each year, and percentage of disabled persons hired includes
special-purpose subsidiaries *11 Excluding employees on long-term assignments overseas, employees on temporary assignment, mid-year recruits, employees on long-term sickleave, and employees on extended leave *12 Revised remote work system in July 2020 eliminating upper limit on times

60

TOYO ENGINEERING CORPORATION

Integrated Report 2022

583(15%)580(15%)638(15%)676(15%)737(16%)

2,866

2,811

2,815

2,824

3,087
2,745

1,090

1,081

1,119

1,112

1,150

1,040

1,027

1,065

1,055

1,090

50(5%)

54(5%)

54(5%)

57(6%)

60(5%)

Man-hours

76,493,784 hours

102,817,669 hours

49,642,608 hours

44,895,756 hours

59,524,567 hours

Fatalities*1

2

1

0

0

0

2

10

3

3

3

0.05(4)0.11(11)0.06(3)0.07(3)0.05(3)

No. of managers*6*7
Male
Female (%)*1

Lost time incident rate
(total of fatalities and lost time incidents)
Medical treatment*1 (no lost time)

31

27

11

20

16

Total recordable incident rate*1*9(total number of incidents)

0.46(35)

0.37(38)0.30(14)0.51(23)0.32(19)

1,030

973

998

968

989

863

804

817

790

809

167(16%)

169(17%)181(18%)178(18%)180(18%)

790

735

757

738

754

Female (%)
No. of engineers

Female (%)

Male
Female (%)

748

693

709

687

703

42(5%)

42(6%)

48(6%)

51(7%)

51(7%)

578

558

583

569

573

561

539

561

543

548

17(3%)

19(3%)

22(4%)

26(5%)

25(4%)

22(2.1%)18(2.2%)21(1.8%)21(2.6%)24(2.5%)

No. of foreign employees

56

47

48

50

60

No. of male employees taking
childcare leave

1

4

4

5

10

No. of female employees taking
childcare leave

4

9

3

7

12

No. of persons taking paternity leave

14

39

21

25

28

No. of persons working shorter hours
for childcare reasons

21

14

14

15

12

No. of persons working shorter hours
for nursing care reasons

1

2

1

1

1

No. of persons taking family care leave

94

102

96

81

101

No. of persons taking nursing care
leave

0

0

0

0

1

Percentage of annual leave used*11

58.3%

62.0%

61.9%

57.6%

54.7%

71

184

207

960

All employees

No. of disabled persons hired*10

No. of persons working from home*12

TOYO ENGINEERING CORPORATION

Integrated Report 2022

Data Section

Directors

3,888

342(11%)

No. of managers*7

0

4,625

3,749

2,537

*1*8

Non-consolidated

Serious information security incidents

4,425

3,566

287(10%)

Male

Information security promotion initiatives

4,204

3,370

2,529

Lost time incidents

Compliance Risk Management Reports

3,950Foundation for Sustainable GrowthFiscal 2020

4,015
3,432

286(10%)*1

Fiscal 2021

Fiscal 2019(fiscal year ended
March 31, 2022)

2,533

Male

Fiscal 2018

Fiscal 2020
(fiscal year ended
March 31, 2021)

278(10%)No. of employees*5
Fiscal 2017

Fiscal 2019(fiscal year ended
March 31, 2020)

2,601

Female (%)

GovernanceFiscal 2018
(fiscal year ended
March 31, 2019)

265(9%)

Male

8,649MWh—

Purchase volume of printing paper(wood-free paper)

6,882MWh

No. of engineers*6

Consolidated

Electricity usage at Head Office andoverseas group companies*30Female (%)

Fiscal 2021

Fiscal 2017
(fiscal year ended
March 31, 2018)

Medium-term Management Plan

No. of toxic material leaks(Domestic/overseas construction sites)
CO2 emissions for TOYO Group*2

No. of employees*5*6

88%

Industrial waste volumes (Domestic)

Industrial waste volumes (Domestic Head Office)Management Vision

Environment61

Ten-Year Financial Highlights
Toyo Engineering Corporation and Consolidated Subsidiaries
Years ended March 31
Millions of yen

2014/3

2015/3

2016/32017/3

2018/3

2019/32020/32021/32022/3*4

Net sales

228,723

230,124

311,454299,813431,917335,697

294,993

219,094

184,000

202,986

Gross profit (loss)

24,20025,155

17,21430,513

15,971(12,521)

10,636

18,765

18,557

20,838

10.6

10.9

5.5

10.2

3.7

(3.7)

3.6

8.6

10.1

10.3

SG&A expenses

22,606

24,69924,57019,426

17,98020,42916,25016,875

16,941

17,875

Operating income (loss)

1,593

455

(7,356)

11,087(2,009)(32,951)(5,613)

1,890

1,615

2,963

Ordinary income (loss)

4,032

4,942

(25,280)

3,873

1,603

(27,821)

3,426

2,467

2,781

3,126

Profit (loss) attributable to owners ofparent1,457

967(20,965)

3,038

1,472

(26,846)

(818)

1,664

814

1,620

Comprehensive income

3,178

4,088

(25,534)

8,492

1,066

(25,758)(3,818)

(376)

4,097

4,485

New orders

290,444

365,137

470,369

443,537

116,790309,325

298,052

187,054

122,895

274,467

Backlog of contracts

410,492

538,023

659,005

823,066

492,682448,629426,373

389,236

310,691

381,954

Total assets

240,694

257,480

261,609

321,836

317,089

251,861

239,694

208,719

218,255

240,853

Total net assets

71,091

74,831

44,97951,036

51,331

25,17636,35735,98040,07744,562

Interest bearing debt

40,08744,797

31,91832,64531,84430,841

32,71027,62928,16736,679Net debt(31,588)(52,137)(58,543)(91,480)(90,858)(75,694)(65,197)(52,584)(66,316)(53,121)

28.9

28.5

17.2

15.8

16.2

10.0

15.1

17.2

18.3

18.4

Operating activities cash flows(18,986)

21,244(4,192)

46,37618,984(22,824)(25,828)(18,696)

17,753(6,790)Investing activities cash flows(1,587)(1,638)

9,587(11,776)(16,650)

6,386

1,354

7,980

(2,712)(7,851)

Financing activities cash flows

(532)

3,167

(14,341)

1,099(1,548)(1,174)

16,768(6,159)

(451)

7,608

Dividends per share (annual) (yen)

5.0

3.0

4.0

4.0

2.0

0.0

0.0

0.0

0.0

0.0

Earnings per share (EPS)*1 (yen)

37.99

25.23

(546.72)

79.24

38.42

(700.30)(20.51)

28.40

13.91

27.65

1,815.75

1,913.07

1,170.99

1,329.60

1,337.40

654.91554.11

544.16650.52766.81Price earnings ratio (PER)

53.8

93.9

—

18.5

36.3

—

—

11.4

56.2

23.0

Return on equity (ROE) (%)

2.1

1.4

(35.9)

6.3

2.9(70.3)

(2.7)

4.6

2.2

3.8

Management Vision

2013/3*3

Financial Highlights

Gross profit margin (%)

Foundation for Sustainable GrowthBook value per share (BPS)*1 *2 (yen)Medium-term Management Plan

Equity ratio (%)

Data Section*1 The company conducted a one-for-five reverse stock split of common shares effective October 1, 2017. “Book value per share” and “Earnings per share (loss)” have been calculatedon the assumption that this reverse stock split had been conducted at the beginning of the fiscal year ended March 31, 2013.
*2 “Book value per share” for the fiscal year ended March 31, 2019 and after is calculated after deducting residual assets attributable to class A preferred stocks issued in March 2019from total net assets.
*3 The company applied “Partial Amendments to Accounting Standard for Tax Effect Accounting” (The Accounting Standards Board of Japan (“ASBJ”) Statement No. 28, February 16,2018), etc. from the beginning of the fiscal year ended March 31, 2019. The figures for the fiscal year ended March 31, 2018 are based on retrospective application.
*4 “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) has been applied since the beginning of the fiscal year ended March 31, 2022, and items
such as management indicators for the fiscal year ended March 31, 2022 are those after applying this accounting standard and other items.

62

TOYO ENGINEERING CORPORATION

Integrated Report 2022

TOYO ENGINEERING CORPORATION

Integrated Report 2022

63

Corporate Information / Stock Information (As of March 31, 2022)

Global Network

Corporate Name Toyo Engineering Corporation
May 1, 1961

Capital Stock¥18,198 million

Number of
Employees

4,037 (Consolidated, as of March 31, 2022)

Business
Activities

Engineering and Construction for Industrial Facilities
R&D support, design, engineering, procurement,
construction, commissioning, technical assistancetechnical assistance for industrial facilities
Business fields: Oil, gas, oil & gas development,
petrochemicals, chemicals, water treatment, transportation systems, power plant, nuclear power,
advanced production systems, pharmaceutical, finechemical, logistic center, biotechnology, environment conservation and others

Stock Exchange
Listing

Tokyo Stock Exchange

Authorized
SharesCommon Shares
100,000,000
Class A Preferred Shares 25,000,000

Capital Stock
IssuedCommon SharesClass A Preferred Shares

38,558,507
20,270,300

Number of
Shareholders

Common SharesClass A Preferred Shares

16,1992

Toyo-China
ShanghaiToyo-Europe
Milan

Numberof shares(thousands)

Votingrights ratio(%)

Percentage
of total
(%)

8,754

22.89

14.93

Others
1.26%

Financial
institutions
34.44%

Editor’s Note
Thank you for reading the 2022 Integrated Report.
We prepared this year’s report with a focus on TOYO’s roles and initiatives to achieve a sustainable society, progress as

13.44

8.77

The Master Trust Bank of Japan, Ltd. Trust
Account

3,746

9.79

6.39

Custody Bank of Japan, Ltd. Trust Account

2,742

7.17

4.68

Individuals
31.29%

2.61

1.70

Sumitomo Mitsui Banking Corporation

470

1.22

0.80

BBH(LUX)FIDELITY FUNDS-JAPANADVANTAGE

303

0.79

0.51

BNP PARIBAS SECURITIES SERVICESLUXEMBOURG/JASDEC/ACCT BP2SDUBLIN CLIENTS-AIFM

283

0.74

0.48

Numberof shares(thousands)

Votingrights ratio(%)

Percentage
of total(%)

Integral Team Limited Partnership

17,576—

29.99

Innovation Alpha Team L.P.

2,693

—

4.59

2. Class A Preferred Sharesof the second year of the medium-term management plan and a future outlook, and a state of reinforcing both governance and disclosure based on TCFD recommendations. After obtaining approval for the proposed outline of the reportat the management meeting, we moved forward with preparing the various sections of the report in collaboration withmore than eighty related parties, and ultimately, the report was approved at both the management meeting and Boardof Directors meeting. We hope that this helps our various stakeholders, particularly investors, gain a better understand-

Foreignshareholders
6.59%

Domestic
companies
26.42%

ing of TOYO Engineering.
All members of Corporate Communications Department
Corporate Strategy Division

Toyo Engineering Corporation

Planning & Production: Toyo Engineering Corporation (Securities code: 6330)
https://www.toyo-eng.com/jp/en/
Production: IMC Branding, Inc. / Editor-in-chief: Izuru Kako / Editor: Hirotoshi Konuma / Designer: Yoshinobu Iwai / Director: Toru Yamamoto

Notes) 1. The shareholding ratio was calculated based on the exclusion of the 227,058 shares oftreasury stock.
2. Class A preferred stock do not have any voting rights.

Photography by Yasuo Mikome, ASAHIDO

Data Section

1,000

Types of
Shareholder(Common Shares)

Foundation for Sustainable Growth5,140

Integrated Report 2022

TSPI
São Paulo

IKPT
Jakarta

Custody Bank of Japan, Ltd.
(Sumitomo Mitsui Trust Bank, Limited
Re-trust Account, Mitsui Chemicals, Inc.
Pension Trust Account)

TOYO ENGINEERING CORPORATIONTEC Project Services
TEC Business Services
TEC Air Service
TEC Accounting & Consulting
Chiba Data Center Corporation

Toyo-USA
HoustonToyo-Malaysia
Kuala Lumpur

1. Common Shares

64

Toyo-Canada
Calgary

Toyo-Japan
Chiba

Toyo-India
Mumbai

Major Shareholders

Taisei Corporation

Toyo-Korea
Seoul

Medium-term Management Plan

FoundedMitsui & Co., Ltd.

Management VisionCorporate Data

Period covered by the report: Fiscal 2021 (April 2021–March 2022). However, the report also includes information on some matters that fall outside
the period covered by the report.

Editing Policy

Caution Concerning Forward-Looking Statements

The 2022 Integrated Report was prepared to provide stakeholders with a better understanding of TOYO’s financial information (such as our management
policies and financial results) and non-financial information (such as businessenvironment and its connections to society). These are based on the Guidance
for Collaborative Value Creation by the METI and the International Integrated
Reporting Framework of IIRC (International Integrated Reporting Council).

This integrated report includes certain “forward-looking statements.” These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ due to changes
in economic, business, competitive, technological, regulatory, and other factors.

TOYO ENGINEERING CORPORATION

Integrated Report 2022

65

TOYO ENGINEERING CORPORATION
2-8-1 Akanehama,Narashino-shi, Chiba 275-0024, Japan
https://www.toyo-eng.com/jp/en2022