Chapter 4 Growth Strategy

Chapter 4

Growth Strategy

Executive Officer responsible for Financial Strategy

Capital Strategy and Return Policy / FY2022 Results and Forecasts
INFRONEER Medium-term Vision 2024

(Medium-term business plan until fiscal year ending March 31, 2025)

Capitalefficiency

33

Shareholder
returnsAsset
efficiency

―

ROE

9.5%

10.3%

Equity ratio

30% or more

38.1%

D/E ratio

0.6 times or less

0.4 times

Dividend payout ratio

30% or more

39.7%

Purchase of treasury
shares¥40 billion

or more by FY2024¥30 billion

by FY2021 andFY2022―

Annual dividend per share of ¥55 for FY2022

Expected to purchase ¥10 billion in FY2023

Total return ratio

―

69.5%

FY2022:
Dividend payout ratio (39.7%) + Purchase oftreasury shares (27.8%) + Dividends for the
Earth (2.0%)
Intend to pay interim dividends from FY2023

Cross-shareholdings /net asset ratio

20% or lower

19.8%

Approximately ¥8 billion sold in 4Q for a total of¥21.3 billion sold for the full year in FY2022
FY2022 3Q: 22.6% ➡ FY2022 4Q: 19.8%

Sale of owned assets

Corporate Data

The most important task I am committed to as theexecutive officer responsible for finance is to ensure
appropriate financial management to support theachievement of the ongoing INFRONEER Medium-term
Vision 2024 and thus ultimately improve corporate
value. I place particular emphasis on advancing the implementation of the capital policy and return policy asplanned to meet our commitment to our stakeholders.
In FY2022, our business performed well, chiefly owing to the completion of large projects, orders received
for design changes, and the sale of the wind powerbusiness, resulting in increased sales and profit year
on year. Full-year net income for INFRONEER and

MAEDA CORP. combined set a record high. As such,
INFRONEER Holdings has seen its business perform
solidly since its establishment.
In FY2023, while we are adopting IFRS reporting for
year-end settlement, we are expecting to see an increase in operating profit from FY2022 under the Japanese GAAP standard.
One major financial challenge is accommodating thehigh levels of demand for capital for an array of investment programs planned for this fiscal year and onward.
Such programs include new business creation, humanresources development, and IT implementation for thedigital transformation of business processes. In response,
we are pursuing appropriate fund procurement to reduce
capital costs. I am especially looking at reducing liability
costs by making use of low-interest loans as a measure toensure stable financing operations in the future.

Notes

Sustainability

Implementing Appropriate Fund
Procurement to Respond to HighLevels of Demand for Capital

Optimalcapitalstructure

FY2022 results

Growth Strategy

Joined MAEDA ROAD CONSTRUCTION Co., Ltd. in 1986; served as theManager of the Accounting Section at the Head Office and the General
Manager of the Accounting Department; in April 2019, became the
Executive Officer, Deputy General Manager of the Administration Divisionand the General Manager of the Accounting Department. In October 2021,
became Executive Officer of INFRONEER Holdings.

Recognizing the importance of financial discipline, we
adopt the optimal capital structure as the key financial soundness indicator and have set our target for
equity ratio at 30% or more and for the D/E ratio at
0.6 times or less, in accordance with the INFRONEER
Medium-term Vision 2024. In FY2022, results for theabove indicators were 38.1% and 0.4 times, respectively,
achieving the target for each. Furthermore, return on
equity (ROE) in FY2022 was 10.3%, which more thanachieved the target of 9.5% set under the INFRONEER
Medium-term Vision 2024.
INFRONEER Vision 2030 (Medium- to Long-term
Business Plan) includes growth-phase targets of operating profit of ¥100 billion or more, net profit of ¥70
billion or more, and ROE of 12% or more, to be achieved
by FY2030.
The Finance Strategy Department has formulated four
key policies to facilitate productivity reforms by max-

Business Models

Ryuji Endo

Pursuing Offensive andDefensive Investment Strategies to
Maximize Added Value
Top Message

Meeting Capital Demand for
Future Growth Investment toEstablish Japan’s First Integrated Infrastructure Service
Companyplanning an additional purchase of ¥10 billion.
As described above, results in FY2022 exceeded initialplans for each area of capital efficiency, shareholder return, and asset efficiency. Based on these strong results,
we will strive to maintain the momentum for sustainablegrowth, promoting group-wide efforts in order to ensure
an optimal portfolio and balance sheet.

Value Creation Story

Message from Chief Financial Officer

In the financing sector, demand for ESG-linked corporate
bonds and borrowing products has recently been increasing. The INFRONEER Group has already been engaged in
ESG initiatives, having issued its first green bond in 2022.
Going forward, we will positively consider the possibilityof various sustainable financing options, including green
bonds, with a view to slashing liability costs.
We strive to maintain an optimal portfolio and balance
sheet to be able to respond to high levels of demand
for funds while also working to increase asset efficiency as stated in the INFRONEER Medium-term Vision
2024. In FY2022, we worked vigorously to sell off ourcross-shareholdings, completing the divestment worth
more than ¥20 billion. As a result, cross-shareholdings
as a proportion of net assets declined to 19.8%, achieving the target of 20% or less set in the INFRONEER
Medium-term Vision 2024 two years ahead of schedule.
We will continue to work on reducing cross-shareholdings
while also conducting validity reviews.
We also address issues related to the efficiency ofowned assets, particularly the sale of assets. In FY2022,
we sold off two properties owned by MAEDA CORP. In
FY2023, we will continue with relevant activities for examining the validity of our owned assets including holdings of other business companies to identify inefficient
assets and take appropriate disposal steps, including
sell-off.
With respect to the shareholder return policy, we acquired ¥10 billion of treasury shares in FY2022, followinga ¥20 billion acquisition in FY2021. In FY2023, we are

Carefully examine the status of use of the Group’s owned assets and the like, and consider
selling or integrating inefficient assets

34

Chapter 4 Growth Strategy

By carrying out plans and strategies as described above,
I believe INFRONEER Holdings will be able to receive ahigher evaluation from shareholders and investors. The
Tokyo Stock Exchange recently issued a request for its
listed companies with a below-par PBR to disclose andimplement improvement measures. In response, weare striving to address the immediate issue of attaining
targets for financial indicators while also adhering to thepolicies on capital efficiency and shareholder returns.
The Group has raised its PBR to above one*. We willcontinue working to achieve targets for key performanceindicators, including ROE, with a view to improving theequity spread.
* As of August 31, 2023

Sustainability
Corporate Data

As one of the return policy measures, we have set thegoal of acquiring at least ¥40 billion of treasury shares
by FY2024. At present, an acquisition worth ¥30 billion
has been completed and we have announced the plan
to complete an additional purchase of ¥10 billion within
FY2023, one year ahead of schedule. As in the past, we
will continue to carry out the shareholder return policyof proactively offering payouts to the extent possible
according to the situation. I believe this will allow us toobtain greater investor support and approval.
The dividend payout ratio target has been set at 30%
or more. Recent past ratios have been remarkably highat 42.2% in FY2021 and 39.7% in FY2022. The ratio
for FY2023 is planned to surpass the past figures ataround 45.8%.
In October 2021, when INFRONEER Holdings wasestablished, the company announced to stakeholders
its plan to start the voluntary application of IFRS fromthe FY2023 year-end reporting. The primary objectiveof adopting IFRS is to boost the structural efficiency andmaintain the quality of financial reporting related to theGroup’s business management as well as to increase
suitability for comparative analysis of financial information in international capital markets.
One major advantage of adopting the IFRS is, in general terms, that it will make it easier for businesses toprocure funds from overseas and establish cross-border corporate partnerships. In addition, the shift awayfrom the Japanese GAAP will likely be accompanied by
an expansion in the scope of the balance sheet due toan increase in the number of consolidated subsidiaries
and the application of new lease accounting standards,
which will cause a substantial impact on ROE and other

Growth Strategy

35

While adopting various financing methods, we are considering the introduction of ROIC as a measure of our
profitability relative to the amount of capital invested byshareholders as well as the amount of value created inaddition to the possible effective use of the indicator.
One major challenge with using ROIC is that certain
areas of the Group’s business, such as construction andcivil engineering, have a funding structure that makes
them unsuitable for segment-based analysis, making
it difficult to apply unified rules conducive to using theindicator for the overall business. We are therefore considering the need to invent what would be called the
INFRONEER ROIC, a scheme specific to our company,
which takes into account added value. For this purpose,
we are studying calculation standards and methods todetermine those best suited to the Group and analyzing
study results to adopt an efficient mathematical formulation model.
To implement the INFRONEER ROIC, the Finance
Strategy Department needs to work with other related departments to create opportunities to explain thereasons and purposes for introducing the new indicator
to the business companies as well as all officers andemployees to ensure a full understanding of all thoseconcerned. The first and foremost objective is to raise
ROE, one of the major goals stated in the INFRONEER
Medium-term Vision 2024. I believe that the INFRONEER

Contributing to Improving
Corporate Value through Implementing
Financial Strategies

financial indicator figures. Currently, we are engaged
in transition work to prepare the IFRS balance sheet
format, and are moving forward with the required tasks
while considering the relevant impacts on financial indicators and steps to take to address the issues.
Financial statements based on the IFRS framework
will make it easier to conduct a comparative analysis of
the global competitive situation, attract buy-and-holdinvestors from overseas, gain higher market confidence,and reduce liability costs as a result.
I believe the transition to IFRS reporting will also havea notably beneficial role in promoting a global mindset to underpin our corporate vision—“A world where
there’s no limit to what can be asked from and what canbe delivered by infrastructure services”—and raising
the consciousness of all officers and employees. On thefinancial front, IFRS rules require that a goodwill impairment test be performed annually without necessarily
implying that amortization be conducted on a regularbasis. This, I think, may have a favorable effect on ourbusiness results.
I am firmly committed to carrying out financial strategies to achieve the INFRONEER Medium-term Vision
2024 and INFRONEER Vision 2030, our promise to all
our stakeholders. I will thus endeavor to wisely and proactively accommodate high levels of demand for capitalfor various programs, such as enforcing the capital policy
and return policy, creating new businesses, developing
human resources, promoting M&A projects, and implementing IT and DX initiatives.
To support the INFRONEER Group in accomplishing theaim of becoming Japan’s first integrated infrastructureservice company, I will make all-out efforts in my capacity
as chief financial officer while engaging in solving socialand environmental challenges through business activities.

Business Models

Calls for business enterprises to address ESG issues are
growing more insistent. In line with this trend, business-

Introducing ROIC
as a Value Creation Indicator

ROIC would be a useful indicator that could help businesscompanies carry out management strategies to achieve
the ROE goal. I would also suggest that ROIC be used asa key indicator for achieving INFRONEER Holdings’ goalof improved capital, and that it be taken into accountwhen considering plans for new M&A projects and entry
into new fields.

Top Message

Commitment to Sustainable Financees are expected to place more emphasis on improving
ESG and other non-financial performance in addition totheir pursuit of economic growth such as net sales andprofit—to rethink, in other words, their attitude toward
corporate value enhancement. Recognizing this situation, our Group has already been engaged in addressing
environmental and social issues through business activities, as exemplified by efforts to develop the renewableenergy business.
We will continue with these efforts and seek to improve our corporate value by promoting and expanding
businesses conducive to creating a decarbonized society
and building sustainable and autonomous local communities. This is our way of achieving the sustainable development of business and society, and we will pursue
sustainable finance in earnest to this end.
Sustainable finance represents the set of financial
mechanisms and initiatives set up to encourage efforts
to solve environmental and social challenges. In 2022,
INFRONEER Holdings issued its first green bond, which
received a “Green 1(F),” the highest grade under the JCR
Green Finance Framework Evaluation, conducted by
Japan Credit Rating Agency, Ltd. (JCR).
The purpose of issuing the green bond was bigger
than simply lowering the cost of financing. Rather, we
are also pursuing sustainable finance as an essential
financial strategy, based on the Group’s policy on promoting ESG activities.

Value Creation Story

imizing added value, optimizing administrative costs,
and promoting Group financial strategies.
The first policy is to ensure financial soundness by
maintaining the financial discipline to attain ROE targets,and to examine methods for increasing financial leverageby making effective use of interest-bearing debt.
The second is to compile the financial plans of individual business companies to create and manage an
overall financial plan for the entire Group. As a costcutting measure, we will apply CMS efficiently to raise
the efficiency of fund operations while reducing externalborrowings to reduce add-on interest rates.
The third is to consider a number of subjects basedon a summary of major accounting issues and practicaloperation guidelines, which were completed in FY2022
ahead of the shift to IFRS reporting. Business processreviews and system improvement for overall operations,
including those of business companies, as well as preparation of financial statements and disclosure policy are
the targets of such consideration.
The fourth is to dispose of surplus properties byworking together with business companies to identify
inefficient assets and arrange selling processes where
possible. Our intention is to reduce total assets throughappropriate sell-offs, with an eye to curtailing administrative costs, including general administrative expenses andfixed expenses, thus helping to improve corporate value.
Following these four policies, we will proceed with
operations to contribute to achieving the goals of the
INFRONEER Vision 2030.
For the purpose of achieving the goals for FY2030,
we are promoting the dual-approach investment strategy—“proactive” growth investment and “reactive”
permanent investment—to maximize added value, witha view to additional enhancement. Specific plans havebeen laid out to invest in a broad range of areas such as
the creation of new revenue bases, aggressive M&A, IT
and DX strategies, production facilities, and R&D. In the
INFRONEER Medium-term Vision 2024, concrete plans
were presented for two areas defined as the source ofour competitiveness, with the schedule and scale specified: spending of ¥36 billion in the infrastructure management business and ¥50 billion in M&A projects, overthe course of three years for each.
Our basic strategy for business portfolio development
is to expand the infrastructure business. We will help
enhance the portfolio by ensuring effective capital allocation to facilitate personnel transfer to the infrastructure management segment and promote M&A and alliance projects. One key approach is to use profits fromexisting segments to invest in expanding businesses in
the infrastructure field, aiming to become an integrated
infrastructure service company.

Together with members of the Finance Strategy Department

36Chapter 4 Growth Strategy

Establishing a New Revenue Base

(Medium- to Long-term Business Plan)Establishing a position
at home and abroad ininfrastructure services

Overview of INFRONEER Vision 2030

• Expanding concession projects in Japan and overseas• Building a system for new
business areas• Increasing availability payment contracts• Promoting DX/shared services• Improving productivity throughDX/shared services• Promoting M&A• Further promoting M&A

25

100

80.5

Operatingprofit59

57

40→Results
44.2

(8.3)
FY2022

FY2024FY2027

Transition to International Financial
Reporting Standards (IFRS) in FY2023

Progress of INFRONEER Vision 2030

FY2030Operating profit margin:

8.0% level

Operating profit*¥48.8 billion
Net income*Target for
FY2030Operating profit*¥100 billion
or moreNet income*¥44.2 billion¥70 billion

ROE

ROE

or more10.3%

12% or more

Dividend payout
ratio

Dividend payout
ratio

39.2%

30% or more

* Profit figures assume the application of
IFRS (including profit from sales, profits
from application of equity method, andM&A without amortization of goodwill) andtherefore differ from the figures provided in
the financial results report.

Productivity Reforms
Maximizing added value

Optimizing fixed expenses and administrative costs

Promoting Group financial strategy
We have introduced a group-wide cash management system (CMS), which has enabled us to improve efficiency in working capital management within the Group, bringing about a year-on-year reduction of ¥48 billion in short-term borrowings. Also, taking advantage ofpossessing the highest financial rating in the Group, INFRONEER undertakes the Group’s overall operations for raising external funds toreduce financing costs. We will continue striving for efficient fund management within the Group.

37

iOS:

Android:

Strengthening and Improvement of Corporate Culture
Promoting a Group human resources strategy―introduction of trust-type stock compensation to foster Group engagement
We have decided to introduce a new stock benefit trust (J-ESOP) to grant
our entire workforce of around 8,000―all regular and contract employeesof INFRONEER Holdings and Group companies―the right to acquire sharesof the company. This compensation will be offered in addition to current
salary, starting from FY2024. The new plan represents one of the many
incentive plans being considered to encourage employees to undertake
highly challenging tasks aiming to achieve lofty visions and goals as well as
reward their performance. Our rationale behind this is as follows: sharesof INFRONEER Holdings are an embodiment of the shared entity of theGroup and its corporate value, and by being offered to employees, they willplay a catalyst role in increasing the centripetal force of the organizationand fostering a sense of belonging to the same organization or a sense ofunity. To be more specific, we are looking to nurture employees’ mindset in
the following areas: “a sense of emotional attachment and closeness to theGroup,” “interest in business management,” “interest in the stock market,”and “consciousness of the Group’s profit.”For more details, visit our website at:https://www.infroneer.com/jp/news-article/2023/05/11/662.html (in Japanese)Strengthening governance

SharesSharesSharesShares

MAEDA CORP.

MAEDA ROAD

MAEDA SEISAKUSHO

SharesSharesSharesConsolidated companies

Consolidated companies

Consolidated companies

・Eligibility: all regular and contract employees of the Group (approx. 8,000)
・4% of the Group’s consolidated net income equally allocated to eligible
employees
・Also offered in recognition of childbirth and long service (decade milestone)of employees

Corporate Data

In pursuit of promoting shared services, we have established INFRONEER Digital Solutions Inc. (IDS) to improve business process efficiency
and outsource accounting and personnel affairs. While optimizing fixed costs and administrative expenses, we aim to create an environment
where employees previously engaged in these operations can be shifted to undertake more productive tasks.

We have launched a new data-driven infrastructure management business by investing a total of ¥2.0 billion in Whole Earth Foundation, which
has developed the user-based data collection app TEKKON. Our aim is toutilize infrastructure-related data collected by the tool and build a new
ecosystem connecting general citizens, infrastructure companies, andlocal governments through the app and cryptocurrency.

User-based data collection app TEKKON is available for download from the following site at:

Sustainability

Since INFRONEER Holdings was launched, we have won a growing number of contracts through concerted sales efforts of the three business companies. One such contract was undertaken jointly by MAEDA CORP. and MAEDA ROAD for the relocation of Asahi Breweries’
plant in Fukuoka (scheduled to reopen in Tosu City, Saga Prefecture, in 2026). This project constitutes a part of the new industrial area
development project led by Tosu City aiming for employment creation and economic promotion in the region. We will encourage thethree companies to share their knowledge with each other and ramp up concerted sales efforts to maximize added value.
At the same time, we will consider the possibility of global expansion, targeting regions where INFRONEER is likely to have the opportunity to make effective use of its strengths to suitably respond to local needs.

Further expanding business areas

Growth Strategy¥6.6 billion goodwill from
MAEDA ROAD TOB, ¥1.7 billion
amortization of machinery, etc.

Operating profit

70

10

FY2022
results

Business Models

Unit: ¥ billion

Net
50.5
income →Results
48.8
36

30

Since the establishment of INFRONEER
Holdings, we have begun to win a growing
14
14
260
number of contracts for public-private
partnership projects. As opposed to the7past practice of MAEDA CORP., MAEDA
86
ROAD, MAEDA SEISAKUSHO, and otherGroup companies conducting sales activities separately, the new group-wide
Before
FY22
FY22
FY23
Before
FY22
FY22
FY23
sales operation system organized under
shift
Q2
Q4
shift
Q2
Q4
the holding company structure has led
Concession projects: 5 in operation; 1 under construction
to an increased number of municipalities
Comprehensive private “construction” projects: 8 in service
with which the whole Group has businessconnections, resulting in a growing number of public-private partnership projects being undertaken by the Group.
Meanwhile, the Japanese government defines public-private partnership (PPP/PFI) as a key element of its “new capitalism” economic
policy and has announced its plan to expand the related framework significantly in the coming 10 years, increasing the budget from ¥20
trillion to ¥30 trillion and the target number of projects from 70 to 575. We will take advantage of this favorable opportunity to accelerate
our efforts to achieve further growth and solidify our market position.

Top Message• Pursuing Group synergy

Returns to remunerationaccording to performance

Growth phase

Number of projects undertaken

Number of municipalities with which
INFRONEER has connections

329

INFRONEER aims to become an integrated infrastructure service company that provides one-stop infrastructure management services
covering the entire process from upstream to downstream. To this end, we are promoting group-wide strategies, centering on the threestrategic pillars to address “productivity reform,” “establishing a new revenue base,” and “strengthening and improvement of corporate
culture.” The vision contains the phase for building bases for growth from FY2025 onward, setting out a range of targeted and specificinitiatives for pursuing Group synergy, building a system for entering new business domains, promoting DX and shared services, andpromoting M&A. According to this vision, we have set financial targets for FY2030 as follows: net sales of ¥1.2 trillion or more; operating
profit of ¥100 billion or more (operating profit margin of 8.0% level); net income of ¥70 billion or more; and ROE of 12% or more.

Base building phasePublic-private Partnership Undertaken after Shift to the Holding Company Structure

Value Creation Story

Overview and Progress of INFRONEER Vision 2030

For details of enhancing governance, see page 45.

38

Chapter 4 Growth Strategy

Management Roundtable among Three Business Companies

Masaaki Shioiri

President and Representative Director
MAEDA CORPORATION

President and Representative Director
MAEDA SEISAKUSHO CO., LTD.

Joined MAEDA CORPORATION in 1981; served as an
Executive Officer and General Manager of the Planning
Promotion Department of the Building Division from2010; became Director and Senior Managing Officer andGeneral Manager of the Building Division of the company
in 2017; became President and CEO of MAEDA ROAD
CONSTRUCTION Co., Ltd. in June 2020; became Directorof INFRONEER Holdings Inc. in June 2023.

Joined MAEDA CORPORATION in 1997; served as a
Director and Managing Officer from 2002; served asa General Manager of the Building Division and was incharge of Sales Promotion; served as President andRepresentative Director of the company in 2016; inOctober 2021, became the Director and Chairman of
INFRONEER Holdings.

Joined MAEDA SEISAKUSHO CO., LTD. in 1981;
served as an Executive Officer and General Manager
of Machinery Sales Department, Industrial Machinery
Division in the company from 2008; served as
President and Representative Director of the company
from 2013; became the Director and Executive
Officer responsible for Capital Investment Strategy of
INFRONEER Holding in October 2021.

39

For *1, *2, and *3, refer to the glossary on page 64.

INFRONEER Group’s UniqueStrength Derived from Networks andComprehensive Capabilities
Maeda: MAEDA CORP. is receiving increasing orders

Imaizumi: In future phases, it is vitally important that
MAEDA ROAD strive to expand its business areas, utilizing information to be shared under the integrated structure. As part of such efforts, we are currently engaged
in a project to provide services for the comprehensive
management of roads and other facilities in Fuchu City
(East District), which was launched in April 2021 by the
consortium formed by MAEDA ROAD, MAEDA CORP.,
and six other companies. Going forward, we will put
more focus on this business area, seeking to develop it
into the third pillar of our business along with construction and manufacturing. We are also looking to increase
our chances of winning a contract by cooperating with
MAEDA CORP. to offer joint proposals.
Shioiri: MAEDA SEISAKUSHO is also promoting technicalcapabilities development in cooperation with MAEDA
CORP.’s ICI Center. We are strongly aware of the need toproactively adopt new technologies to be able to provide
the machinery and equipment required for comprehensive
management and other forms of infrastructure services.
Maeda: As a successful demonstration of comprehensive
capabilities by the three companies, we jointly undertook
a project to build a private driving course in Minamiboso
City in 2022. While the project could not have been undertaken by a single company, we provided deliverables
with superior work quality and a shortened delivery time,
which was only possible by taking full advantage of thethree companies’ engineering capabilities. Going forward,
we will endeavor to build a substantial track record in collaborative undertakings by enhancing our comprehensive
capabilities, thus moving closer to becoming an integrated
infrastructure service company.

Group’s Common Cultural Principle
INFRONEER^ Provides a Guidepost for
Post-integration Development
Maeda: The Group’s common philosophy INFRONEER^(“INFRONEER Caret”) plays an important role in enabling the three companies to work together to promotebusiness.

Corporate Data

Maeda: MAEDA CORPORATION (“MAEDA CORP.”) has
been aiming to establish its business as an integrated
infrastructure services provider since even before thefounding of INFRONEER Holdings (“Holdings”).
Specifically, we have been pursuing “de-construction”
businesses such as concession projects and renewableenergy development, while at the same continuing to engage in “construction” business. It is my view that MAEDA
CORP. should assume significant roles and responsibilities
in promoting cooperation among the three companies forthe provision of integrated infrastructure services.

The “construction” business, a major segment of thebuilding construction business, is susceptible to economic fluctuations and external factors. Establishinga business model that ensures stable profitability has
been our long-term issue. For this reason, we have expanded into other areas related to renewable energy
development, infrastructure operation, PPP*1/concession*2, and comprehensive management services.
One major benefit of integrating the management
under Holdings is related to finance. The overall corporate
size has become sufficiently large to achieve economies
of scale so that we can delegate our entire financing
operations to Holdings.
Imaizumi: The concept of an integrated infrastructure

For “Establishing a position at home and abroad in infrastructureservices,” see page 38.

Sustainability

Synergistic Effect from Transition to theHolding Company Systemservice company as envisioned by Holdings represents
an ambitious undertaking. I anticipate that the Groupwill be expanding in the future from the current structure composed largely of the three business companies.
Each business company must work to fulfill our commitment to performance goals and achieve growth.
A m o n g t h e t h re e c o m p a n i e s , M A E DA R OA DCONSTRUCTION (“MAEDA ROAD”) has benefited mostfrom the synergies generated. We receive support from
MAEDA CORP. for securing human resources and IT
system implementation. We also receive assistance withsales operations, such as referral of customers and information sharing, which has led to a significant increasein orders received.
MAEDA ROAD will be able to make substantial contributions to the Group by utilizing our well-establishedregional offices in more than 200 locations around
Japan. In particular, we can provide a strong advantage
to Holdings for undertaking PPP/PFI*3 projects by drawing
on our strengths in promoting locally based development
strategies. Sharing our strengths among the four companies, including Holdings, should increase the possibilities
for creating new value and new businesses.
Shioiri: MAEDA SEISAKUSHO, a machine manufacturer, boasts strong technical capabilities to deliver noveland specialty machines, as opposed to ready-mademachinery, by offering customized proposals from product planning to design. We are leveraging this strength
to respond to orders from MAEDA CORP. and MAEDA
ROAD for high-mix low-volume production of specialty machines to be used on construction sites. We are
ramping up proposal-based sales activities to increase
orders received while considering the future possibilityof manufacturing machines related to infrastructure
management services.
In my view, the starting point for generating synergies will be personnel exchanges. This involves not only
cooperation with Holdings through personnel transfer
but also cooperation and information sharing between
the business companies. As a result, we have alreadyreceived new project orders.

Growth Strategy

Soji Maeda

President and CEO
MAEDA ROAD CONSTRUCTION Co., Ltd.

President and Representative Director
MAEDA CORPORATIONBusiness Models

Yasuhiko Imaizumi

Soji Maeda

Top Message

It has been roughly 18 months since INFRONEER Holdings was founded. In Japan, the environment surrounding the infrastructure industry
is becoming increasingly challenging due to a shortage of engineers, weakening of local government revenues, and aging infrastructure.
Meanwhile, it is giving rise to a number of social issues, including the need for how infrastructure should be managed, maintained, andoperated. Against this background, the company is being put to the test in its efforts to establish business as an integrated infrastructureservice company that engages in the entire range of infrastructure development processes from upstream to downstream. To respondeffectively to social needs while achieving the Group’s continued growth, it is imperative that all Group companies work closely together
to increase its comprehensive capabilities. This section presents a report on a talk session held by the presidents of the INFRONEERGroup’s three business companies. They share their views on the future direction their organizations will take as members of the Groupand the effect and synergies of the management integration.

Increase Group synergies
as an integrated
infrastructure services
providerfor large-scale concession and PPP projects as well ascomprehensive management services for buildings andfacilities under the control of municipalities. As a comprehensive management services provider, we send representatives of the Local Business Promotion Department
to municipalities to learn about their infrastructure-related problems and propose solutions. In this area, demandis rising due to the rapidly worsening engineer shortage
and facility aging, giving us a larger number of orders for
projects across Japan than before Holdings was established. The number of municipalities we serve has also increased. For such projects, we can leverage the strengthsof MAEDA ROAD and MAEDA SEISAKUSHO based on theindividual and organizational networks they have builtwith local governments and enterprises through regionally oriented business development.

Value Creation Story

Maximizing Group Synergies through Three-way
Collaboration and Making Strides as an Integrated
Infrastructure Service Company

40

Chapter 4 Growth Strategy

Group-wide Sustainability Initiatives* ZEB/ZEH-M: stands for “Net Zero Energy Building & Net Zero Energy House Mansion,”
which refers to buildings and housing with a net zero or negative level of primary energy
consumption.

adopt the product for standard use.
Shioiri: To reduce CO2 emissions, MAEDA SEISAKUSHO
is developing battery-powered machines and broadening the product lineup. In Europe, the world leader inpromoting environmental initiatives, demand for electrically operated construction machinery is rising, and I
anticipate that this trend will arrive in Japan before very
long. MAEDA SEISAKUSHO will work to contribute to
reducing CO2 emissions from the Group as a whole.
Imaizumi: I take note of the benefit of the formation of
Holdings for the purpose of recruiting employees for thebusiness companies. At MAEDA ROAD, I tell new hires
about the future possibility of working with employees
from MAEDA CORP. and MAEDA SEISAKUSHO to launcha new business project and the chance to engage in various businesses as they choose.
Maeda: Some people may feel anxious about the factthat MAEDA CORP. was delisted as a result of the integration. The delisting may affect recruitment results.
However, I believe such anxiety will be diminished byeffective communication of the fact that INFRONEER
Holdings is newly listed and of the Group’s holistic
status. Appropriate communication to the public tocommunicate the growth of the INFRONEER Group will
improve public expectations for MAEDA CORP.
Shioiri: MAEDA SEISAKUSHO, based in Nagano Prefecture, is having difficulties recruiting employees in otherprefectures, where the company has a lower profile.
A particularly challenging issue is hiring mechanics forservice engineering. We visit vocational schools for mechanics to hold recruiting sessions, but many students
prefer to be employed by automakers. As members of
the INFRONEER Group, we will now utilize nationwide
networks, in addition to regional networks in Nagano,to promote recruiting activities with an emphasis on
MAEDA SEISAKUSHO’s appeal as an employer. We hope
we will have better results.

Taking on Future Challenges as an
Integrated Infrastructure Service Company
Shioiri: MAEDA SEISAKUSHO has been committed to©THE MAGARIGAWA CLUBEnhance technicalprowess and support
strong public
infrastructure
Masaaki Shioiri

President and Representative Director
MAEDA SEISAKUSHO CO., LTD.

developing a strong reputation for technical prowess.
Maintaining this commitment, we will aim to play a rolein building public infrastructure by providing MAEDA
CORP. and MAEDA ROAD with machines to increase
their productivity and worksite safety. At the same time,
we will endeavor to enhance employee engagement andmotivation.
Imaizumi: My long-held aspiration is to make MAEDA
ROAD a leading road construction firm, which is now
within reach. We will strive to enhance our technologicalcapabilities and workplace environment as well as ourbusiness performance and to offer appropriate returns
to employees and shareholders, which in turn will createa virtuous cycle that will take us to where we aim to be.
Maeda: Since the launch of Holdings, a synergistic effect has begun to take place in a favorable way. MAEDA
CORP. is bracing itself to play a leading role in promoting
efforts toward the provision of integrated infrastructureservices, primarily by building a robust track record as abusiness company.
The whole world has begun adapting to the new“living with COVID” environment. And labor shortages
are threatening various industries. On the other hand,
the market is expanding rapidly and generating many
more business opportunities, which is likely to provide afavorable environment for us to meet the needs of society and grow our business. To develop the INFRONEERGroup as an integrated infrastructure services provider,and contribute to society, the three business companies
will work together more closely.

Corporate Data

President and CEO
MAEDA ROAD CONSTRUCTION Co., Ltd.

For a report of the discussion held by project members, visit our website at:https://www.infroneer.com/jp/sustainability/topics/minamiboso.html (in Japanese)

Sustainability

Yasuhiko Imaizumi

This project was implemented within a 400,000 m2 development area locatedin a mountainous district of Minamiboso. The project involved the constructionof the full-scale driving course and six different facilities for delivery to theclient, Japan’s first private driving club. The project was the manifestation of
INFRONEER’s comprehensive capabilities, with MAEDA CORP. responsible forbuilding and civil engineering construction, MAEDA ROAD for constructionof the course, and MAEDA SESAKUSHO for offering working prototypes of
purpose-built machinery.

Growth Strategy

Play a leading role
in reducing CO2
emissions generated
by the Group

Asia’s first members-only driving course (Minamiboso City, Chiba Prefecture)

Business Models

Maeda: Climate change is posing a major challenge tothe construction industry.
Imaizumi: Within the INFRONEER Group, MAEDA ROAD
is the largest CO2 emitter, principally due to its asphalt
mix materials manufacturing business. We are committed
to carbon neutrality as an urgent issue to be tackled toachieve sustained growth. As part of related efforts, wehave set up Japan Biofuel Co., Ltd., a subsidiary that will
use animal and plant fat and oil waste to manufacture
a fuel alternative to heavy oil. We are scheduled to start
producing biofuel in September 2023. The product will be
supplied not only for use within MAEDA ROAD but also byother Group companies and later offered for sale in theexternal marketplace. Our plan is to grow the biofuel project into a mainstay business as well as make it a driving
force for the Group’s CO2 emissions reduction initiatives.
Maeda: MAEDA CORP. entered the renewable energy
business early on. While undertaking solar and wind
power development projects, we also take on challenges
to adapt to advanced energy-saving technologies, suchas for meeting ZEB/ZEH-M * standards, and develop
wood building techniques. We are also discussing thepossibility of applying these technical capabilities tosupport the biofuel business of MAEDA ROAD. In a similar fashion, we adopt environmentally friendly products
made by MAEDA ROAD, including LEAB. It’s an asphalt
mixture that has a lower mixing temperature and therefore generates less CO2 emissions and also produces
a more durable pavement, for improved quality. At
MAEDA CORP., LEAB is on the list of items for standard
use in pavement construction work. In addition to internal use, we are also proposing to environmentally conscious customers at the design planning stage that they

Demonstration of synergy created by the three companies

Top Message

41

for the Highway Techno Fair, a trade show for highway
construction and maintenance technologies. I observed
employees from each company start to interact with
one another, which, along with the expanded scale ofthe booth, gave me a solid sense of team unity. I hope
the Group’s corporate culture and employee mindset
will continue to advance according to the guideposts
provided by INFRONEER Caret.

Value Creation Story

Shioiri: Contained in INFRONEER Caret is the phrase“Respect: Building trust through acknowledging eachother.” I am glad this idea is permeating throughout theentire Group and serving to “power” the diverse strengthsof employees to generate new value. I truly hope thatevery one of us has built a mindset based on this idea.
Maeda: MAEDA CORP. is committed to the philosophy
represented by RESPECT, an element of INFRONEER
Caret, which is to be applied not only to its employees
but also to society, customers, and partner companies.
The entire statement will serve an important function byacting as a common language that connects the businesscompanies.
One notable benefit from the establishment of Holdings
is that it has caused a valuable change in the mindset ofindividual employees at Group companies, who are now
more aware of the importance of cooperation. We havealso increased synergistic effects by sharing information.
Specifically, sales and customer information owned by individual business companies is shared at regular Marketing
Strategy Meetings held by executive officers at Holdings.
MAEDA CORP. has begun to refer its customers to
MAEDA ROAD for a road-related civil engineering project,and MAEDA CORP. receives an order for land development from a customer of MAEDA ROAD. These are actual
examples indicating the significant effect of the establishment of Holdings.
Imaizumi: I have noticed a remarkable effect in termsof personnel exchange. Previously, although they weremembers of the same corporate group and shared thename MAEDA, there was not enough cooperation between the companies. We should have been more active
in promoting inter-company sharing of our strong technical and business resources to put them to more effective use. Although MAEDA ROAD’s understanding thissituation at the time was not the best, there was also
the fact that there was a sense of rivalry, in a good way,
as they did not want to lose to MAEDA CORP. as a groupcompany. Therefore they missed some opportunity tocollaborate with MAEDA CORP.
Through such history, the three companies are now
positioned on an equal footing under Holdings. This
structure has encouraged each company to pursue personnel exchange while maintaining its own corporate
culture, which exposes employees to different ways ofthinking and viewing things and fosters mutual respect
for the culture of the other companies, thus achieving
inclusion. This is very significant. In these rapidly changing
times, if the Group is reduced to a homogenized organization with minimal diversity, it may undermine ourorganizational strength.
Maeda: As personnel transfer to Holdings is increasing,
I hope to see a growing number of employees broaden
their perspective to take on a viewpoint that includes
the entire Group.
Shioiri: I am sure that the structural shift to the holding
company system will produce desirable effects slowly
but steadily. I noticed a related sign the other day when
the three companies set up a joint exhibition booth42

Chapter 4 Growth Strategy

Two Strategies for Accelerating Advancement toward Integrated
Infrastructure Service Company

For details on human resources strategies, see page 55.

INFRONEER’s Approach to DX

Management

MAEDA CORP.

Data-driven evolution of “construction” and “de-construction” businesses

In the “construction” business, MAEDA CORP. is making company-wide efforts to collect and analyze data related to construction
production, principally construction costs. The purpose of these efforts is to systematize construction processes and know-how,which have been developed on an individual worker and on-site operation basis, into codified knowledge through data analysis.
In the infrastructure management (“de-construction”) business, the company develops optimal repair plans by utilizing inspection
and repair data, in addition to prediction programs for road pavement aging. In this way, MAEDA CORP. plans to combine data on
construction production and facility management to precisely simulate the lifecycle of infrastructure.

MAEDA ROAD

Combining road civil engineering service know-how with
big data technology to contribute to better public services

MAEDA ROAD boasts a wealth of experience as a long-time contractor of comprehensive private
contracting road construction projects, including one launched by Tokyo’s Fuchu City in 2014, whichbecame Japan’s first to introduce the relevant contract scheme and where the company served as alead manager. In an effort to continuously contribute to municipal road management, the company isdeveloping and offering database systems that take advantage of its strengths: its extensive experience in the area of comprehensive private contracting road construction; expertise it has built up as aroad civil engineering contractor; and big data such as for daily road maintenance and vehicle traffic.

MAEDA SEISAKUSHO

Launching the internal program “Full-power DX 100” to produce new activities

MAEDA SEISAKUSHO has formed the DX Promotion Team, comprising members selected from each business division and theInformation System Department. The team aims to accomplish the target of creating and implementing 100 plans for DX promotion
in five years under the slogan “Full-power DX 100.” The team is working on four DX-themed activities: data-driven marketing;manufacturing (smart factory); development of digital technology professionals; and improvement of organizational culture.
Among them, data-driven marketing DX is a priority subject of discussions for exploring approaches to achieving rule changes toenable the use of data to generate added value.

Corporate Data

43

DX Initiatives Promoted by Each Company

Sustainability

In the past, DX strategies were developed for each
Change of Planned Digitization Investment Allocation
business segment according to the specific situation,
100%
10.3%
Expand10.0%
Advance reformand digitization investments were discussed by each
20.0%
investment into achieve
reform forbusiness company independently. However, to utilize
continuous
80%
26.2%
growth
growthdatasets on infrastructure collected from every phase of
40.0%
30.0%
the life cycle to facilitate business growth, standardized60%
IT and data utilization platforms must be prepared.
Reduce permanent
Suppress growth
40%
Therefore, we have decided to create the Group’s
operating costsin permanent
63.5%
comprehensive digitization strategy by adopting the
50.0% operating costs 50.0%
20%enterprise architecture*1 framework and setting up
the basic policy by layer to achieve the Group’s total
0
optimization. In this process, we are planning to create
Present
Growth phase
Futurea platform that contains the Group’s overall directions,
■Run
■Grow
■Transform
IT/DX strategies pursued by each business, and eachindividual initiative in complete alignment. We also
recognize the importance of defining the Group’s overall enterprise architecture and achieving total optimization when promoting
M&A, one of the Group’s key growth strategies and facilitating post-merger integration processes.

At INFRONEER, the IT/DX Strategy Office is tasked with formulating and managing the Group’s overall policies under the leadershipof the responsible executive officer, while at each business company, the respective Business Reform Department and Information
System Department work together to promote each company’s IT/DX strategies. Especially, MAEDA CORP. takes the lead in
implementing various initiatives by mobilizing its abundant information system professionals and a dedicated DX team.
Specifically, MAEDA CORP. performs DX skills assessments for all employees and management team members to develop DX
professionals across the organization. The assessments were made based on the two criteria of digital skills and work process reform
capabilities to be acquired by March 2024, and MAEDA CORP. provided support to all employees for achieving target scores foreach of the two criteria and improving skills individually according to their levels. As a result, the target achievement rate rosefrom 38% in the first evaluation (July 2022) to 78.5% in the third evaluation (August 2023), indicating an obvious improvement
across the organization. Additionally, the in-house Data Science & AI Center has been established under the leadership of technicaland information professionals, which engages in planning for data analysis and utilization aligned with business needs as well asinternal implementation of generative AI and other cutting-edge technologies.
Going forward, we will ramp up structure building efforts for the entire INFRONEER Group.

Growth Strategy

INFRONEER Group’s Medium-term IT/DX Strategies

Building Structures and Developing Human Resources for
Implementing IT/DX Strategies

Business Models

As part of its management strategies, INFRONEER defines DX as a digital technology-enabled function for transforming itself into an integrated infrastructure
Contents
Story
service company. If rule changes in all infrastructure areas are described as the“story” of the management, then digital technology corresponds to the “content”
of the management.
As an integrated infrastructure service company, INFRONEER holds huge datasets relating to various types of infrastructure facilities that cover every phase of
the life cycle. INFRONEER aims to maximize the utilization of these datasets toDXoffer effective solutions to many social issues associated with infrastructure, andDigitalRule
DX will play a crucial role for this purpose.
technology
changeTake an example from construction production. Production processes andprocurement prices vary according to the environment around the construction
site, weather conditions, and many other factors. On-site operations develop
knowledge for assessing the impact of such factors on production and taking appropriate responses, and previously, such knowledge was usually retained only in an implicit form and within individual projects.
Seeking to turn such implicit knowledge into explicit knowledge, we are presently collecting and analyzing data on production
processes and procurement prices. Then, we plan to use the explicit knowledge to achieve data-driven, precise cost simulation
processing to create a function for optimizing construction costs in a true sense, thereby offering appropriate stakeholder returns.

*1. Enterprise architecture refers to a business tool concerned with a corporation’s organizational structures and roles as well as information systems supporting its operations, which
provides a framework for working out an overall optimal system design for all the above functions, considering the two different timeframes of the present and future.
*2. CSIRT stands for “computer security incident response team” and refers to a dedicated function for responding to information system security incidents.

Top Message

Culture and people are the key to the growth of INFRONEER, and we are therefore committed to strong human resources and DX
strategies. To realize our vision of becoming an integrated infrastructure service company, we need to challenge the conventional
infrastructure business model. To this end, it is essential to promote transformation at the organizational and individual levels,and to expedite this process, we pursue digital transformation (DX), a form of “rule change” driven by digital technology. By implementing DX strategies, INFRONEER seeks to effect business process innovation as well as organizational and individual innovation,
which is more than simply digitizing work processes. Based on this thinking, we are promoting culture- and people-driven growth
while building a unique sense of teamwork to challenge the status quo.

Value Creation Story

INFRONEER’s Growth DriverIn the growth phase we will enter before long, we will run the Group’s common IT platform to drive transformation toward theestablishment of the integrated infrastructure service business. At the same time, we will engage in governance reform initiatives
to support the defined enterprise architecture. To ensure the Group’s ongoing growth, we will reform digitization investment
structures, suppress growth in permanent operating costs, and expand investment allocation to priority areas to advance reform
for growth. (See the chart for Change of Planned Digitization Investment Allocation on page 43.)
We will endeavor to enhance information security, primarily by providing information security education to the management
team as well as officers and employees to improve their awareness while implementing measures to prevent information leakage
and fend off cyberattacks throughout the Group. As one of such countermeasures, the Group’s CSIRT*2 will be set up to promptly
detect a case and take appropriate action in the event of a cyberattack.

44