Corporate Report2022

In tro d u c ti o n

Corporate
Philosophy

I n t ro d u c t i on

An infrastructure building company
that helps create affluent communities

Based on our core pavement business, for supporting social infrastructure and distribution of goods, which we have developed
over many years, we at Seikitokyu Kogyo are expanding our fields of business in areas such as manufacturing and sales of asphalt
mixtures which are the basis of pavement technology, civil engineering works for creating urban and natural environments, as wellas water use, sports facilities and landscaping. We are building a network to bring communities together by creating infrastructure
for daily life there, with a primary focus on the projects and product facilities we are deploying throughout Japan.

About Seikitokyu Kogyo GroupG ro w t h St r a t e g y

E S G Se c t i o nLong-term Vision (Where We Should Be in 2030)

CONTENTS truly strong corporate group that pursuesA
personal and corporate growth in tandem andhelps realize a sustainable society

Introduction

Me di um -te rm Ma nag e m e nt Pl a n (2021-2023)

To earn trust
To rise to the challenge for change
To take the lead and take action
To share our knowledge and technologies

Corporate
Philosophy

Long-term
VisionBusiness Policies for
the Fiscal YearE d i t i n g Po l i c y
Our aim in publishing this report is todisclose initiatives designed to improve
Seikitokyu Kogyo’s medium- to long-term
corporate value to our shareholders,investors, and all other stakeholders,
and to encourage opportunities for
dialogue. The report includes not only
financial information, but also nonfinancial information on topics such as
our long-term corporate vision, theenvironment, society, and governance.
We hope this report will help deepen
your understanding of our corporate
goals and approach.

Corporate Report2022

010_0319087912211.indd

1

2

SEIKITOKYU KOGYO CO., LTD.

2022/11/24

ure

Various Policies andGuidelines

Medium-termManagement Plan

ult

c
te

ora

rp
Co

Compliance Codeof Conduct

Repor t Scope and Timeframe
Timeframe: April 2021 to March 2022
(includes some activities that falloutside this period)
Scope: T he whole Seikitokyu Kogyo Group However,some of the non-financial information refers to
SEIKITOKYU KOGYO CO., LTD. only.

1

Contents/Scope of Information

2

History of Seikitokyu Kogyo Group3

Financial and Non-Financial Highlights

5

Value Creation Process

7

Growth Strategy

Seikitokyu Kogyo Group Compliance Code of Conduct

ActionGuidelines

Corporate Philosophy/Editing Policy/Guidelines

About Seikitokyu Kogyo GroupBecoming a truly strong corporate group
Ac ti on G ui de l i ne sGroup Philosophy System

Data Section

Message from the President

9Long-term Vision

13

Medium-term Management Plan

14

Strategies by Business Segment

15

Research & Development and Intellectual Property 17

To recognize that safety always comes first when executing our business.

Capital Policy and Financial Strategies

 o conduct fair and transparent business activities that not only naturallyTcomply with all laws and regulations but also conform with internal rules.
To conduct fair and transparent decision making.

ESG Section

18

To conduct timely disclosure in an appropriate and fair manner.

Materiality of Seikitokyu Kogyo Group19

To conduct appropriate accounting and reporting.

Environmental

21

To focus on the market and provide products that customers trust.

Social23

 o comply with environmental laws and regulations and conductTenvironment-conscious corporate activities.
To have absolutely no dealings with anti-social forces and to resolutely
refuse any improper demands.
To provide and preserve fine, healthy workplace environments.

Special Report: A Conversation on D&I

29

Governance31

To seek to use electronic information fairly, maintain trust, and ensure
confidentiality.
To recognize the importance of intellectual property and trade secrets andensure they are both handled appropriately.
To always distinguish between public and private needs and never act in a
way that would be detrimental to the Company’s interests.
To never engage in insider trading or the sale of stocks or other items that
could be considered suspect.

Financial Information

35

ESG Data

37

Company Profile and Stock Information

38

Data Section

Scope of Information

Financial Information
Overview

Non-Financial Information

Website (https://www.seikitokyu.co.jp/en/)

Corporate Reports (in Japanese and English)
Reference Guidelines
Environmental Reporting Guidelines, Japan’s
Ministry of the Environment
Guidance for Collaborative Value Creation,
Japan’s Ministry of Economy, Trade and Industry

Financial Results Presentation Materials
Securities Report

Financial Results

Reports

Corporate Governance
Reports

Details

13:21:01

Corporate Report 20222

About Seikitokyu Kogyo GroupI n t ro du c t i o n

About Seikitokyu Kogyo GroupG ro w t h St r a t e g y

Data Section

E S G Se c t i o n

History of Seikitokyu Kogyo GroupWe were established in January 1950 as SEIKl KENSETSU KOGYO CO., LTD. The Company changed its name to SEIKI
KENSETSU CO., LTD. in April 1962, and later merged with Tokyu Road KK to establish SEIKITOKYU KOGYO CO., LTD.
Today, our business encompasses
pavement construction works for expressways and other roads, airports, bridges,
regulating reservoirs, and station platforms and maintenance of sports parks and athletic fields, as well aspavementmaterials manufacturing and sales and acceptance of construction waste. The Seikitokyu Kogyo Group, which includes 12
subsidiaries, operates across Japan and in
Myanmar and Guam.

1950
1956 Establishment of
the Japan Highway Public
Corporation

1964 Tokyo Olympics

1973 The Yom Kippur War(the first oil crisis)

1979 The Iranian Revolution(the second oil crisis)

Establishment of “Seiki of technology”
Worked on the frontline of road construction during the postwar reconstruction and rapid economic growth period
SEIKI KENSETSU (1950–1982)

The origin of the Company name of
SEIKl KENSETSU KOGYOSEIKl KENSETSU KOGYO CO., LTD. was established in January
1950 by Masaaki Seto, Hidenobu Oshima, and others, who played acentral role in urban planning and road construction in Manchuria.
The Company worked on the frontline of road construction in
postwar Japan and provided a foundation for reconstruction andrapid economic growth. Shortly after the establishment, theCompany started to show its presence with great ambitions for road
construction and advanced technologies, receiving an order for the
first pavement construction work on service contract from the
Ministry of Construction in 1955 and an order for the first pavement
construction work from the Japan Highway Public Corporation in
the following year. A laboratory was established in 1959, where
research on asphalt pavement was conducted while concrete
pavement was the mainstream at the time. This laid the foundation
for what will later be called“Seiki of technology.” Thefirst asphalt plant wasestablished in 1951, and thefirst recycling plant wasestablished at Myokenjima,
Edogawa-ku in 1977, withan eye to changes of thetimes.
Pavement construction work at the

The Company was established in the first year of
the second half of the 20th century, and the roadpavement works by the founders were recognized
by a chief engineer of U.S. military as the best
work humans have done in the century (seiki).
The Company name derives from these events,
expressing the ambition to continue to produce
business achievements of the century.

time of the Company’s foundation

In response to an increasing demand for road pavement, the Road
Construction Unit of Tokyu Construction Co., Ltd. was separated
from the company in January 1967 to establish Tokyu Road KK.
While constantly delivering results as a company specialized inroad construction, Tokyu Road was committed to building asphalt
material plants. The material plants established in Asaka andYokohama in the 1960s form the basis of the material network in the
Kanto area, which constitutes our strength today. The 1970s saw thestart of the urban court business. Environment and landscapetechnologies that originate here are used today for many sports
facilities and parks, such as tennis courts, athletic fields, andpromenades.

Kenzaburo Kondo(The first president of SEIKl KENSETSU KOGYO CO., LTD.)(The first president of Tokyu Road KK)

Masaaki Seto was the central figure of SEIKl
KENSETSU KOGYO CO., LTD., both as thepresident and as an engineer. Although theCompany was a relative latecomer to thebusiness, he made its name known nationwide
within a few years after the establishment andexpanded the business scale.

Kenzaburo Kondo played a central role in urban
and road planning in Hsinking, the capital of
Manchuria, and led road construction projects.
He served as secretary general of the Japan
Highway Users Conference after World War II
and was known as a traffic policymaker androad theorist since early days.

TOPICS

1982
1985 The Plaza Accord

TOPICS
January 1967 	Tokyu Road KK established1967 	Hakone Turnpike pavement construction work
October 1967 	Established Asaka bitumen plant
December 1968 	Established Yokohama bitumen plant1970 	Launched Tokyu Mix cold construction mixture
September 1975 	Acquired the urban court business

SEIKITOKYU KOGYO CO., LTD.

1991–1993 Collapse of
bubble economy

Emulsion plant in Myanmar (Operations
currently suspended)

Returned to the core business in Japan after the collapse of the bubble economy Diversification of pavement
technologies, such as pavement that drains water, reflects solar radiation, or resists freezing, as well as ICT construction
After the collapse of the bubble economy, the Company concentrated its management resources on the core business. A wide range of pavement
technologies were established, including pavement that drains water, which prevents water from staying on the surface and has become common in
today’s expressways; pavement that reflects solar radiation, which curbs the heat-island phenomenon; and pavement that resists freezing, which
prevents car accidents caused by slippery road conditions in winter. In addition, the Company has satisfied the diversifying needs of society byusing its technologies. For example, research and development, as well as actual use, of ICT construction has been under way, which can address
various issues, including safety of construction works, productivity at construction sites, stabilization of quality, and future labor shortage.

Anti-freezing pavement(Type G Zapeck method)

ICT construction technology

TOPICS
Urban Cool (solar radiation reflective type) (Shibuya Crossing, Tokyo)
2008 The global financial
crisis

2011
2011 The Great East Japan
Earthquake

In 1999 and 2001, the Company received an order for the first pavement
construction work on performance based contract and an order for the firstpavement construction work based on the comprehensive evaluation contract
respectively from the Ministry of Land, Infrastructure, Transport and Tourism.
These once again showed internally and externally the ambitions andadvanced technologies passed on since the establishment of the Company.

September 1996 	Established the action guidelines
March 1999 	Received an order for the first pavement construction work on
performance based contract from the Ministry of Construction
March 2001
Made a successful bid for two construction projects out of thethree for construction projects for the first pavement construction
work based on the comprehensive evaluation contract ordered by
the Ministry of Land, Infrastructure, Transport and Tourism
September 2002 	Established the Compliance Code of Conduct
Trans-Tokyo Bay Highway bridge pavement construction work
Central Japan International Airport apron pavement construction work
New Transit Waterfront Line track construction work, etc.

Help to achieve a sustainable society on the basis of our expertise in road construction Geared
toward medium- to long-term increase in corporate value
In addition to committing to the core business centered around road construction, the Company supports disaster restoration and reconstruction
through a wide range of business activities. As the frequency and severity of large earthquakes, typhoons, torrential rains, and other natural
disasters increase, the opportunity to engage in disaster restoration and reconstruction increases as well. Specifically, the Company eliminatesroad obstacles in expressways and other major roads, which is the first step of restoration; removes and takes in rubbles; works on full-fledged
restoration of roads; constructs new, alternative routes; engages in bank protection works; decontaminates radioactively contaminated areas; andengages in works related to interim storage facilities that store soil removed in the course of decontamination and contaminated waste.
As global warming and other environmental problems have become increasingly serious, the Company works on research and development ofenvironmentally friendly products and construction methods, as well as introduces facilities to reduce environmental impact. In addition,
initiatives are under way to shape the overall picture of environmentally friendly business activities.
The Group will continue to give consideration to the global environment and help achieve a sustainable society, aiming for a medium- to longterm increase in corporate value.
TOPICS
December 2015 	Established the Seikitokyu Kogyo
Corporate Governance Guidelines
April 2016 	Established the training center (TTC)
January 2020 	Celebrated the 70th anniversary of theCompany’s founding
May 2021
Formulated Where We Should Be in 2030
Shin-Tomei Expressway Shimizunishi pavement construction work
Tokyo-Gaikan Expressway Ichikawa pavement construction work
Naha Airport runway expansion and pavement construction work, etc.

Expanded business fields beyond road construction
Made a full-fledged foray into the fields of leisure, construction works, and overseas works, and received orders of 100 billion yen in fiscal 1989
Seikitokyu Kogyo
As Japan saw the end of rapid economic growth and a transition to low
growth, SEIKl KENSETSU KOGYO CO., LTD. and Tokyu Road KK merged on
May 1, 1982, to establish SEIKITOKYU KOGYO CO., LTD.
The first large-scale merger in the road industry strengthened the businessfoundation and resulted in the gradual expansion into the golf course
development and resort facility construction businesses in later years. In thefiscal year ended March 1990, the Company received orders of 100 billion
yen, which was the target set at the time of the merger.

3

1990

Asphalt mixture plant

Tokyu Road (1967–1982)

Masaaki Seto

January 1950 SEIKl KENSETSU KOGYO CO., LTD. established
October 1955 	Received an order for the first pavement construction
work from the Ministry of Construction
November 1956 	Received an order for the first pavement construction
work from the Japan Highway Public Corporation
September 1973 	Listed shares on the Second Section of the Tokyo Stock Exchange
May 1976
Established the equipment centerMay 1977
Installed the first recycling plant
April 1980
New technology research laboratory established

Asphalt pavement construction work

TOPICSMay 1982 	SEIKI KENSETSU CO., LTD. and Tokyu
Road KK merged and changed corporatename to SEIKITOKYU KOGYO CO., LTD.
November 1982 	Changed listing to the First Section of theTokyo Stock Exchange
Tohoku Expressway Ichinohe pavement construction work
Honshu-Shikoku Bridge (Kojima–Sakaide route) pavement
construction work
New Chitose Airport runway pavement construction work, etc.

Minamisoma Mixture plant established after the Great East Japan Earthquake (Fukushima)

Training center (TTC)

Corporate Report 2022

4

About Seikitokyu Kogyo GroupI n t ro du c t i o n

G ro w t h St r a t e g y

About Seikitokyu Kogyo Group

Data Section

E S G Se c t i o n

Financial and Non-Financial Highlights

Financial Highlights (as of and for the years ended March 31)
63rd fiscal year 64th fiscal year 65th fiscal year 66th fiscal year
Unit

2012

2013

2014

2015

67th fiscal year 68th fiscal year 69th fiscal year 70th fiscal year 71st fiscal year 72nd fiscal year 73rd fiscal year
2019
2020
2016
2017
2018
2021
2022

Operating Results
Orders received(Millions of yen)

70,32968,90073,321

71,08375,72471,42780,57278,81786,88989,611

82,850Net sales(Millions of yen)

61,106

71,091

71,69163,542

74,63470,07581,65974,03678,63190,025

85,132

Operating income(Millions of yen)

2,294

3,731

4,779

4,528

6,291

6,412

6,235

5,564

5,961

8,470

4,418

Ordinary profit(Millions of yen)

2,178

3,551

4,730

4,487

6,261

6,338

6,239

5,584

6,009

8,395

4,358

Net profit attributable to owners of parent(Millions of yen)

1,886

3,705

3,793

4,365

5,682

5,621

2,274

3,480

6,544

5,180

3,304

Cash Flows(Millions of yen)

2,945

4,796

5,433

2,862

6,679

6,949

6,303

4,781

4,461

1,138

4,646

Cash flows from investing activities(Millions of yen)

(130)

(608)

(1,407)(1,234)(1,658)(4,896)(2,231)(1,777)(3,808)(3,622)(3,668)Cash flows from financing activities(Millions of yen)

(2,610)(4,828)(1,551)(1,604)(1,603)

1,815(1,684)(2,005)(2,919)2,343(2,232)

Cash and cash equivalents at end of year

(Millions of yen)

3,206

2,566

5,041

5,064

8,482

12,35014,737

15,735

14,16914,035

12,814

Net assets(Millions of yen)

8,801

11,344

12,791

17,083

21,231

26,07228,09831,54336,63240,79040,497

Total assets(Millions of yen)

49,597

48,10650,80956,07957,544

66,444

72,19270,90674,656

79,40978,295Interest-bearing debt

(Millions of yen)

8,659

5,009

4,508

3,508

2,508

5,008

4,008

2,404

772

5,007

7,007

Cash flows from operating activities

Financial Position

Amount Per Share (after adjustments for the reverse stock split) *A one-for-five reverse stock split was conducted in October 2014. Figures as of and for the years ended March 31 after fiscal year 2014 reflect the effects of the reverse stock split.
Net income

(Yen)

10.54

19.36

95.48

108.13140.78139.26

56.35

86.16

162.40128.45

84.81

Net assets

(Yen)

31.50

51.34

316.84423.19525.96645.90696.09780.73909.13

1,010.99

1,082.33

Dividends

(Yen)

—

—

15

15

17

17

10

27

47

43

30

(Yen)

66

82

615

518

471

531

688

589

816

931

746

Equity ratio

(%)

17.7

23.6

25.2

30.5

36.9

39.2

38.9

44.5

49.1

51.4

51.7

Return on equity

(%)

21.7

36.8

31.4

29.2

29.7

23.8

8.4

11.7

19.2

13.4

8.1

Price-earnings ratio(Times)

6.26

4.24

6.14

4.79

3.35

3.81

12.21

6.84

5.02

7.25

8.80

D/E ratio(Times)

1.0

0.4

0.4

0.2

0.1

0.2

0.1

0.1

0.0

0.1

0.2

Stock price at end of year
Financial Indicators

Non-Financial Highlights (as of and for the years ended March 31)
Number of employees (consolidated)(persons)

1,031

1,043

Number of employees (non-consolidated)
Male

Female71st fiscal year 72nd fiscal year 73rd fiscal year

5

2021

SEIKITOKYU KOGYO CO., LTD.

Number of employees (non-consolidated)
Engineering position(persons)

2022

Research and development expenses(Millions of yen)Non-engineering position

1,098

379
841

2020

(persons)

869

931

841

869

931

812

624

649

694

773

86

96

119

217

220

237

2020

2021

2022

71st fiscal year 72nd fiscal year 73rd fiscal year
2020

Holding

Pending3738Frequency rate of occupational accidents(non-consolidated, construction departments)(%)(cases)

36

0.97
0.65

755

71st fiscal year 72nd fiscal year 73rd fiscal year

382

423

Number of patents held(including utility models and design registrations)

2021

2022

27

29

0.47

34

10
71st fiscal year 72nd fiscal year 73rd fiscal year
2020

2021

2022

9

2

71st fiscal year 72nd fiscal year 73rd fiscal year
2020

2021

2022

71st fiscal year 72nd fiscal year 73rd fiscal year
2020

2021

2022

Corporate Report 2022

6

About Seikitokyu Kogyo GroupI n t ro du c t i o nValue Creation Process

G ro w t h St r a t e g y

About Seikitokyu Kogyo Group

Data Section

E S G Se c t i o n emaining conscious of the global environment as we helpR
create affluent communities
Improving medium- to long-term corporate value

Value
Provision

As an infrastructure building company that helps create affluent communities, we aim to provide
lasting value to society and improve our own corporate value over the medium- to long-term.
Social Issues (Risks and opportunities)

Where We Should Be in 2030

Declining working-age population due to shrinking population, aging society, and low birth rate

Securing leaders

Uncertain future political, economic, and international situations

Public-works expenditure trends

More frequent and severe natural disasters

Increased awareness of disaster prevention and mitigation

Deteriorating infrastructure

Greater national resilience

Less construction of new roads

The soundness of central and local government financial situations

Infrastructure lifecycle costs

More efficient upkeep management

Immature infrastructure in some Asian and developing countries
Global environment protection and climate change issues

Vigorous infrastructure demand
Low carbon, zero carbon Zero fossil fuels, energy saving

Improving productivity

Fluctuation in crude oil priceHigher demand for maintenance/updating

Concerns over reduced straight asphalt supply volumes, and price fluctuation

Renewable energy

A truly strong corporate group that pursues
personal and corporate growth in tandem
and helps realize a sustainable society

Business Processes
Construction business

Pavement materials manufacturing and sales businessSound financial platformShareholder’s equity (40.4
billion yen)Interest-bearing debt (7.0billion yen)Pavement

Outside the Group’s business sphereSales/transportation

Physical capitalH ead office, branch offices (13),business offices (53), material plants (49)Technological research laboratory,
testing laboratories (8)Equipment center, construction
machinery
Training centerS ales/transportation

Procurement

Construction

Human capital aw materials
R
mining umber of employeesN(consolidated: 1,098)
Qualified personnel
Experience, knowledge,
technical skills
Engagement

Pavement construction

R&D, construction
and products
backed by hightechnologicalprowessS ervice/
management

Asphalt composites

Diverse andhighly talented
human resources

Recycling scrap materials

Net salesS

Our business partners
 air and equal businessF
dealings
Co-creation based on
mutual trustP21-22
Waste
Environmental protection

Infrastructure

Natural disasters(FY2021–2023)

Natural capital
Financial capital orking capital, capitalW
expenditure
Strengthening financialbase (investment andprocurement reserves)
SEIKITOKYU KOGYO CO., LTD.

 ontribution to disasterC
recovery and restoration

Initiatives to reduce
environmental
impactG

Local residents Job satisfaction

Medium-term Management Plan7

 afe and secure basis forSdaily living

Environmental contribution

P19-20

1st Phase

Fossil fuels, water, air

Local communities

Operating income

Social capital
Customers
Partner companies
Permits and licensesH istory, corporate performance,completed projects
Brand, corporate culture,rules, standards

 afe and secure basis forSdaily living
Kindness, sense ofconnection, self-fulfillment

Key performance indicators (KPI)

Co-creation
opportunities with
Tokyu Group

Initiatives on Key Material Issues
E

Job satisfaction

P15-16

Materiality of Seikitokyu
Kogyo GroupT echnical capability, expertise,patents

Our employees

100 billion yen 8.0 billion yen

M aintenanceand repair

Intellectual capital

Irrigation infrastructure construction

Strategies by
Business Segment

RecyclingR enewal(disposal)

Civil engineering works

Improving medium- tolong-term shareholder valueStable and consistentshareholder returns

Pavement materials manufacturing and sales business

Full network ofmaterial plants in
the Kanto area

Seikitokyu Kogyo
Value Chain

Physical capitalManufacturing investment,
renewal of construction
machineryExpanding base sites

Medium-termManagement PlanP14

Human capitalImproving and maintaining workplaceenvironment and work-life balanceHuman resource training,
talent development
Securing leadersconstruction and products

Our shareholders and investors

Construction business

Strengths
Synergies fromconstruction businessand pavement
materials manufacturing
and sales business

Procurement

materials
manufacturing

Our customers
Needs-focused services
Providing high-quality

OutputCO2

Governance and compliance2nd Phase

3rd Phase

Medium-term Management Plan

Medium-term Management Plan

(FY2024–2026)(FY2027–2029)

Intellectual capital

R&D, joint research
Systems renewal
Promoting digitaltransformation (DX)Social capitalStrengthening compliance managementI mplementing ESG- and SDGs-focused management,
promoting sustainability transformation (SX)Strengthening cooperation andmutual trust with partner companies

Natural capital romoting recycling andPenergy saving
Efforts to reduce carbon
and fossil fuel use
Further environmental considerations

Our environmentGlobal environment
protection

Reinvestment

Financial capitalCompact cities

Private construction demand trends

Input

OUTCOME

Long-term Vision P13

Reducing environmental
impactCorporate Report 20228

Grow th S tra te gy

I n t ro du c t i o n

About Seikitokyu Kogyo GroupG row t h St ra te gy

E S G Se c t i o n

Data Section

Message from the President

More for society, more for the future.
As a professional road constructiongroup, we will strive for Where We
Should Be in 2030 with high aspirations
and the intention for growth.
In a Turbulent Age, Steadily
Focusing on What Is Next
Instability that threatens politics and the economy has
spread all over the world, in addition to the COVID-19 pandemic,
which seems to have no resolution, and the continued tensionof the situation in Ukraine. In Japan, inflation worries haveincreased due to unstable international financial markets
and fluctuations in exchange rates. Meanwhile, anxiety overnatural disasters, such as the disastrous earthquake measuring
upper 6 on the Japanese seismic intensity scale that struck
Miyagi Prefecture and Fukushima Prefecture this March anddamage from torrential rains in various places in the summer,
is only increasing.
In the past several years directly impacted by theunprecedented calamity of the COVID-19 pandemic, serious
crises have occurred in various industries, including service
fields related to daily life and fields related to travel andtransportation. Considering this, it was fortunate that wewere able to continue operations throughout Japan in the road
construction industry, without suspending onsite construction,amid such circumstances with a wide-ranging and long-term
impact on the economy and industry. That is also why ourbusiness, which engages in community infrastructure
maintenance, development of transportation access, andmeasures to ensure national safety and disaster prevention
and mitigation, is always irreplaceable. I am once again deeply
moved by the greatness and universality of the obligationsof bearing a social role that permits not even a moment’s delay.

In this turbulent age, one year has passed since the start ofCompass2030, which strives for us to become a truly strong
corporate group that pursues personal and corporate growthin tandem and helps realize a sustainable society toward
Where We Should Be in 2030, and we have entered the second
year of the Medium-term Management Plan (FY2021–FY2023)
positioned as Compass2030’s first phase.
In the current Medium-term Management Plan, we uphold“(1) Expand stable earnings by further strengthening thecompetitiveness of our core businesses, (2) Rise to thechallenge of expanding business areas and developing new
business fields, (3) Create a virtuous cycle in the recruitment,
retention, and development of human resources, (4) Establish
new ways of working that help improve productivity, and (5)Build a strong and sound management and financial base”
as individual strategies. As important initiatives pertaining tothis, we have expanded development of construction systems;
enhanced acquisition of private customers; promoted theuse of ICT construction; established a system for improvement
and sales of pavement materials; and expanded renewal of
mixture plants, construction offices, and construction machinery
to strengthen the competitiveness of our core business.
Regarding our industry of road construction, public
investments are stable, including promotion of the government’s“Five-Year Acceleration Plan for Disaster Prevention, Disaster
Mitigation, and Building National Resilience.” Fortunately,
the impact of COVID-19 has been limited, and trends in orders
for public works projects have shown no significant change.
I am deeply grateful for the understanding of all sides involved
and the results of the efforts of our executives and employees
and each partner company, such as their thoroughimplementation of infection-prevention measures, in that wewere able to continue construction with nearly no suspension
at construction sites.

2030 Plans/Targets
Operating income

90.0
78.6

SEIKITOKYU KOGYO CO., LTD.

85.1

Net sales(Billions of yen)

8.0
5.8

5.2

Yoshikazu Taira

91.6

8.5

6.5

5.0

4.4
3.3

FY20199Net profit attributable to owners of parent

100.0

6.0
Representative
Director President

However, against the background of strained supply
and demand for crude oil since the spread of COVID-19 andembargo measures against Russian crude oil due to its invasionof Ukraine, there has been a significant impact on the profit
and loss of the products business, such as the price of asphalt
soaring to approximately double what it was before while
there was no sign of high crude oil prices subsiding. We
must endure the current circumstances, in which there has
been no progress in measures to shift the costs of soaring
raw materials prices, while waiting for profits to recover.
The Group’s performance under these circumstances in
the fiscal year ended March 31, 2022 has included harshfinancial results with orders received of 82.85 billion yen (down
7.5% year on year), net sales of 85.132 billion yen (down 5.4%
year on year), and ordinary profit of 4.358 billion yen (down
48.1% year on year). However, looking at the past ten years,
net sales have maintained a high level, and we have obtained
results in line with the plans formulated at the beginning of
the fiscal year on the whole.
Regarding our capital policy, we plan to continue capital
investments of approximately 5 billion yen for the final yearof our current Medium-term Management Plan and will aim
for equity of about 43 billion yen, an equity ratio of 50%, and
an ROE of around 8.6% in order to maintain and improve ourfinancial soundness. Additionally, with the objective of stable
and continuous shareholder returns, we have set targets ofabout 30% for the dividend payout ratio and 50% or morein total shareholder returns.
Based on these performance indicators, the ambitions andintentions of the Company’s executives and employees tobecome second in the industry by reaching the target checkpointof 100 billion yen in net sales and to become a company ourfamilies can be proud of by improving our presence as aprofitable company remain unwavering.

FY2020

FY2021

3.7

FY2023(plan)

FY2030(targets)

Corporate Report 202210

Grow th S tra te gy

I n t ro du c t i o nFirst SBT Certification in the
Industry to Be on the Front Lines
of Environmental Management
The Company launched the SX promotion project andDX promotion project in April 2021, embarking on carbonneutral business operation. From the point of view of having
discussions on the same vector to further improve corporate
value, we combined the SX promotion project and DX
promotion project to form the Sustainable Management
Strategy Project this year, steadily advancing efforts as aproject under the direct supervision of the President.
CO2 emissions related to asphalt production have long
been considered an issue in the road construction industry,and specific initiatives to reduce environmental impact
have been hastened. Our own in-house foaming technologythat reduces CO 2 by enabling asphalt mixture to be
manufactured at a temperature 3 0 lower than previously
is highly acclaimed.
At road pavement sites, it is important to control
temperature when moving asphalt mixture. By transmitting
information on the temperature of asphalt mixture being
carried and vehicle location to a cloud server at fixed
periods, our operation management system that controls
the state of asphalt mixture when it arrives at the sites
makes high-quality pavement possible with the ease of
simply placing a smartphone on a vehicle’s dashboard. We
are also expanding the field of DX usage to prevent
accidents and disasters at mixture plants. The Dragonfly
System developed last fiscal year detects the position ofheavy equipment, vehicles, and laborers using video
obtained from onsite cameras and sounds an alarm to callattention to danger when these come within a certain
distance of each other. More than 1,000 dump trucks enterand exit our mixture plants each day, making accident

prevention a matter of the greatest importance. The
operation of each vehicle on its optimal path will also lead
to CO2 reduction.
Construction of the new head office building, begun tocelebrate the Company’s 70th anniversary, was also completed
successfully. The building took into consideration reduced
environmental impact and energy consumption andobtained “ZEB (Zero Energy Building) Ready” certification.
In addition, we acquired SBT certification in August of thisyear as first in the road construction industry, which was ourgoal from the start of the SX promotion project. Now that wehave established the goal of reducing greenhouse gas
emissions, we are required to take specific actions anddisclose information to achieve carbon-neutral business
operation. This is a promise to the future to contribute to
global environmental protection. It is a sobering thought.

Further Promotion of People,
Society, the Environment,
Governance, and the SDGs
The Company places the utmost importance on executing
people-centric management and has worked out a varietyof policies in the current Medium-term Management Plan tocreate a virtuous cycle in the recruitment, retention, anddevelopment of human resources.
We launched the Diversity Promotion Project in fiscal
2022 to achieve career development, including design of ahuman resource system, with the perspective of the longterm process of recruiting, retaining, and promoting tomanagement women and foreign human resources, whom
we already actively appoint. The Company has many
outstanding women, as well as nearly 40 young employees

Sustainable Management Strategy Composition Diagram
Establish new ways of working

Work-life balance

Achieve sustainable management

Eliminate long working hours

Stakeholder dialogue

Further increasein corporate value

Personal growth

Economic
value

Socialvalue

New business

Sustainable society

Optimized business operation efficiency

Improved customer service

Stronger governance

Carbon-neutral business operation

Digitalization of business operation

ICT

ESG

SDGs

Digital transformation

11

Corporate growth

SEIKITOKYU KOGYO CO., LTD.

Sustainability transformation

About Seikitokyu Kogyo GroupG row t h St ra te gy

with foreign nationality, mainly from Myanmar. Their
presence grows each year, and they are a driving force intheir respective positions. I see the success of thesediverse human resources as a chance to significantly
change the Company and would like to make efforts from along-term, wide-ranging point of view as a pioneering
action for diversity in the road construction industry.
It is unavoidable that society will change significantly,
including changes in world affairs and Japanese politics
and economics and the occurrence of unforeseeable
circumstances. As a company playing a role in social capitaldevelopment, we have identified important sustainability
topics and have set targets to achieve in the areas ofenvironmental protection, infrastructure improvement,
response to natural disasters, contributing to society, andbuilding a pleasant work environment, in addition topromoting governance and compliance, to contribute to theCompany’s own sustainability and the sustainability ofsociety. These are not theories or ideals but our and all our
stakeholders’ promise to society.
Our approach to governance focuses on disclosing
management information in a timely, appropriate, and fairmanner and carefully explaining our thinking in order toimprove our corporate value over the medium to long term.
I am aware of my responsibility as company president tothoroughly instill and strengthen this awareness acrossevery inch of the Company. I also believe we can grow the
Company by clarifying information on actual management
situations and further considering what we could do bypromoting dialogue with many different stakeholders.

Including Our Founding Spirit andDNA in Our Corporate Philosophy
and Action Guidelines
The Company originates from two companies: SEIKl
KENSETSU, founded in 1950, and Tokyu Road, founded in
1967.
SEIKl KENSETSU’s first president Masaaki Seto founded
the company with a passion for land development in areborn Japan, with the country’s postwar devastation in
front of him. Immediately after its founding, SEIKl KENSETSU
received an order for the first pavement construction workon a service contract from the Ministry of Construction in1955 and an order for the first pavement construction workfor expressways from the Japan Highway Public Corporationin 1956. In the 1950s, in addition to the concrete pavementthat was at the height of its prosperity in those days, thecompany laid the foundation for being called “Seiki oftechnology,” such as by researching the asphalt pavement
technology that was in its introductory period.
Tokyu Road was established with the Road Construction
Unit of Tokyu Construction as its parent organization. Its firstpresident Kenzaburo Kondo had led road plans and road
construction since before the war and was known as a traffic
policymaker and road theorist since early days. Tokyu Road
was a latecomer to the business and especially committed

E S G Se c t i o n

Data Section

to building asphalt material plants. The material plants
established in Asaka and Yokohama in the 1960s becamea major part of the material network of the Company today.
The two road companies with pride in their technology
merged in 1982. Since then, the Company has taken on therole of molding social infrastructure, diversifying pavement
technology through pavement work for highways, airports,
and bridges as well as development of high-performance
pavement materials such as draining and heat-insulating
materials, with road construction as its core. In addition, asa member of the Tokyu Group, the Company has borne theduty of reconciling people, society, and nature and ofcreating a refined, high-quality, healthy, beautiful living
environment as included in the slogan of Toward a Beautiful
Age. The Company has also worked to respond to society’s
needs and trust to secure continuous growth and improve
corporate value.
In 1 9 9 2, we made it our Corporate Philosophy to be an
infrastructure building company that helps create affluent
communities. Furthermore, in 1996, we established the four
Action Guidelines of “Earn trust,” “Rise to the challenge forchange,” “Take the lead and take action,” and “Share ourknowledge and technologies.”
The Corporate Philosophy and Action Guidelines that
inherit the Company’s founding spirit and DNA are ourguideposts. When in doubt, we always return to these,
contemplate on the situation, and move forward once more.
We will observe compliance; thoroughly implement
management of processes, quality, and safety; and offer
the best products to customers. We will contribute to theachievement of an affluent society by demonstrating ourindividual capabilities and through the work of our
professional group.

Corporate Report 202212

Grow th S tra te gy

I n t ro du c t i o nLong-term Vision

About Seikitokyu Kogyo GroupE S G Se c t i o n

G row t h St ra te gy

Data Section

Medium-term Management Plan

In May 2021, we formulated a long-term vision for the Group in the spirit of our Where We Should Be in 2030
strategy as: A truly strong corporate group that pursues personal and corporate growth in tandem and helps
realize a sustainable society. We intend to promote ourselves as a truly strong corporate group that sincerely
addresses various measures for realizing the vision and can respond to any future environmental changes, and,as an infrastructure building company that helps create affluent communities, we will provide lasting value tosociety and enhance our corporate value over the medium- to long-term.

Where We Should Be in 2030

A truly strong corporate group that pursues
personal and corporate growth in tandem
and helps realize a sustainable society  O ur people are the Company’s most important management resource.
Based on our corporate culture that promotes high employee engagement, we are determined to
grow the Company further by encouraging employees who have polished their skills through our
substantial training system to demonstrate their abilities without reserve.
We intend to become a sustainable presence in the face of frequent unpredictable situations, suchas the COVID-19 pandemic and natural disasters not by preparing for them, but by improving ourfundamental strengths and crisis response capabilities and achieving true strength.
We intend to help realize a sustainable society by sincerely fulfilling our responsibilities as an
infrastructure building company in both regular and emergency times.

Medium-term Management Plan

From fiscal 2021, we are working on the Medium-term Management Plan (FY2021–2023) as the first phase of
our Where We Should Be in 2030 long-term vision. We will transform into a truly strong corporate group resilient
to environmental changes by promoting individual strategies and key strategies established based on our fivebasic policies for achieving our vision.
Basic
Strategy

Becoming a truly strong corporate group

For achieving our vision (Where We Should Be in 2030), we have started to take actions under the five basic
policies: “Expand stable earnings,” “Diversify revenue sources,” “Execute people-centric management,”“Establish new ways of working,” and “Enhance management and financial base,”to transform into a “truly strong corporate group” resilient to environmental changes.

Individual StrategiesE xpand stable earnings by further strengthening thecompetitiveness of our core businesses
Rise to the challenge of expanding business areas anddeveloping new business fields
Create a virtuous cycle in the recruitment, retention, anddevelopment of human resourcesEstablish new ways of working that help improve productivity
Build a strong and sound management and financial base

Indicator

FY2021 Actual

FY2023 Plan

FY2030 target

90.0 billion yen

85.1 billion yen

91.6 billion yen

100 billion yen

Operating income

8.5 billion yen

4.4 billion yen

5.8 billion yen

8.0 billion yen

Net profit attributableto owners of parent

5.2 billion yen

3.3 billion yen

3.7 billion yen

5.0 billion yen

Net sales

3rd Phase

ROE

13.4%

8.1%

Medium-termManagement Plan

Medium-termManagement Plan

Medium-termManagement Plan

Equity40.8 billion yen

40.5 billion yen

Total assets

79.4 billion yen

Equity ratio

51.4%(FY2021–2023)

Stable, consistent shareholder
returns with a targeted dividend
payout ratio of roughly 30% and total
shareholders return of 50% or more

FY2020 Actual

2nd Phase(FY2027–2029)*Consider appropriate balance with capital efficiency

Key Performance Indicators

1st Phase(FY2024–2026)

Maintain and improve financial soundness

8.6%

10.0%

43.0 billion yen

50.0 billion yen

78.3 billion yen 86.0 billion yen

100 billion yen

51.7%

Approx.
Approx.

Approx.

50%

50.0%

Investment Plans
Consistent and strategic investment to build sustainable business foundation
FY2021Five basic policies

1

2

3

4

5

Expand stableearnings

Diversify revenue
sources

Execute people-centricmanagement

Establish new ways
of working

Enhance management
and financial base

Maintenance, renewal, acquisition of factories,
offices, construction machinery, etc.

Approx.

3.4 billion yen 15.0 billion yen (5.0 billion yen/year)
1.5 billion yen (0.5 billion yen/year)

Strategic investment (M&A, etc.)
Total

Over three-year plan

Approx.

3.4 billion yen 16.5 billion yen (5.5 billion yen/year)

Consistent strategic capital expenditure and technological development are essential for achieving future sustainable growth.
We are currently orchestrating a qualitative turning point in our business assets designed to reduce environmental impact andimprove productivity, and we intend to continue annual capital expenditure of approximately 5.0 billion yen as planed.
13

SEIKITOKYU KOGYO CO., LTD.

Corporate Report 2022

14

Grow th S tra te gy

I n t ro du c t i o n

About Seikitokyu Kogyo GroupG row t h St ra te gy

Data Section

E S G Se c t i o nStrategies by Business Segment

Pavement Materials Manufacturing
and Sales Business

Construction BusinessOverall Status of the Construction BusinessOverall Status of the Pavement Materials Manufacturing and Sales BusinessIn the Construction Business centered on road pavement, in addition topromotion of large-scale construction including expressways and airportrelated construction and of projects based on the “Five-Year Acceleration
Plan for Disaster Prevention, Disaster Mitigation, and Building National
Resilience” formulated by Cabinet decision on December 11, 2020, bothpublic and private orders were strong due to an increase in renewableenergy facilities focused on carbon neutrality.
On the other hand, we recognize that measures in preparation for the
future, such as for the slowing down of economic activity and reduction in
private investment due to the prolongation of the COVID-19 pandemic, thelong-term declining trend in construction ordered by public agencies, andacceleration of the shift from new construction to maintenance andrenewal in infrastructure development, are indispensable going forward. In
addition, securing leaders has become a significant issue in theconstruction industry. The Company is also working actively on measures
to improve productivity using ICT and AI, efforts to optimize infrastructure
maintenance and management, and workstyle reform to rectify long
working hours, and on updating offices to improve the working
environment and promoting diversity.
Orders received for construction and net sales of completed
construction contracts declined in the fiscal year ended March 31, 2022
compared with the previous year, but performance in both sales and profit
has been stable for the past several years.
We also expect the stable order environment to continue in the fiscal year
ending March 31, 2023 and will actively develop our business activities toachieve the 74.8 billion yen in net sales of complete construction contracts
projected at the beginning of the fiscal year.

Net sales(Millions of yen)

74,357
62,836

69,69971st fiscal year 72nd fiscal year 73rd fiscal year
2020

2021

Operating income2022(Millions of yen)

8,428
6,173

6,038

In the Pavement Materials Manufacturing and Sales Business centered onasphalt mixture, production quantity and sales quantity continue to besluggish due to fierce sales competition in the midst of a weak demand
trend in Japan.
In addition, due to the impact of the soaring price of crude oil in thesetimes, there are marked rises in price for purchasing straight asphalt,
which is a main material, and for fuel expenses per taining to
manufacturing and transportation. This compels a very harsh revenue
environment. The Company has so far engaged in initiatives to introduce
machines with highly efficient combustion as well as switch some of ourfuel oil with gas in consideration of reducing environmental impact inconjunction with the upgrading of manufacturing equipment and willcontinue these initiatives as planned in the future.
Performance for the fiscal year ended March 31, 2022 secured net salesof finished goods almost at the level of the previous year, but regarding
profit, we were unable to absorb the impact of the increased
manufacturing cost due to the high price of crude oil and could not avoid
a substantial decrease of nearly half the profit compared with the previous
year.
It is also difficult to expect improvements in the external environment,such as the tense international situation, in the fiscal year ending March 31,2023; therefore, the Company will work concertedly to obtain customers’
understanding regarding ensuring reasonable selling prices, securing thequantity for manufacturing and sales, and cost control.

Net sales

28,570(Millions of yen)

28,721

28,15971st fiscal year 72nd fiscal year 73rd fiscal year
2020

2021

Operating income2022(Millions of yen)

3,163
2,586
1,623

Initiatives to Achieve the Long-Term Vision

Initiatives to Achieve the Long-Term Vision
Amid an expected declining trend in medium- to long-term construction
demand, we strive to prevail in the intense competition and contribute torealizing a sustainable society as an infrastructure building company thathelps create affluent communities. In our current Medium-termManagement Plan, in addition to the aforementioned initiatives, we areworking on further raising the level of our business base with our eyes on
the future and expanding sales in response to demand for renewableenergy.

71st fiscal year 72nd fiscal year 73rd fiscal year
2020

2021

2022

Note: Respective amounts before adjustment, includinginternal transactions between segments.

Regarding our medium- to long-term strategy, we perceive expansion ofsales quantity, carbon neutrality initiatives, and improvement of customer
convenience and realization of workstyle reform through DX promotion as
significant pillars and are proceeding with various initiatives.
With our current Medium-term Management Plan exposed to externalrisk factors including trends in crude oil prices and concerns over supplyof straight asphalt, we are committed to improving our competitiveness by
positioning securing our sales quantity, which is our business base, andexpanding our share of the market as key strategies.

71st fiscal year 72nd fiscal year 73rd fiscal year
2020

2021

2022

Note: Respective amounts before adjustment, includinginternal transactions between segments.

Key Strategies in the Medium-term Management Plan: Major Items
Increase competitiveness to win construction orders from the Ministry of Land, Infrastructure, Transport and Tourism andexpressway companies, by building construction track record and strengthening our response capacity.
Allow all construction sites (business offices) in Japan to support and sustain themselves in the local area to raise the level ofinfrastructure figures.
Focus on addressing aging and deteriorating infrastructure where solid demand is expected, and developing sales in the areas ofdisaster prevention/mitigation, and renewable energy.

Completed Construction ( Customer

Project

Key Strategies in the Medium-term Management Plan: Major Items
Secure sales volume in metropolitan areas with a large market size, by allocating sites to cover our construction works, andenhancing facilities and sales staff.
Further expand market share by responding to customer needs such as enhancing the offering of eco-friendly products and productquality.

Equipment Upgrade PlanSite(Prefecture)

Myokenjima Mixing Plant Renovation Plan

15

East Nippon Expressway Company Limited

Central Nippon Expressway Company LimitedWest Nippon Expressway Company Limited

 avement repair work within the jurisdiction ofP
Towada Management Office of Tohoku Expressway
Aomori avement construction work between Nagoya-nishi
P
Junction and Asuka Junction on Mei-Nikan Expressway
AichiP avement construction work between Okayama Junction
and Ukan Interchange on Okayama Expressway
Okayama

SEIKITOKYU KOGYO CO., LTD.

Myokenjima Mixing Plant renovation plan (architectural
drawing of the planned facility when completed)

The Myokenjima Mixing Plant (Edogawa-ku, Tokyo) is the Company’s only
plant located within Tokyo’s 23 wards, and it is one of our key plants.
As discussions and environmental impact investigations with Tokyo forthe purpose of treatment plant certification were concluded in February2022, going forward, we will sequentially implement renovations of crushingequipment, offices, and plant equipment while continuing operations.
By upgrading equipment, we will improve customer convenience,safety, and revenue, and implement renovations to create anenvironmentally friendly plant that takes its surroundings into
consideration.

Corporate Report 2022

16

Grow th S tra te gy

I n t ro du c t i o n

Research & Development
and Intellectual Property
The Group’s research and development takes into consideration societal technological demand, such as trends in internationalsociety and needs within Japan, and is conducted mainly by the Research and Development Department at the center of theTechnology Division.
At present, we have selected decarbonization and optimization, long life, and productivity improvement for roadinfrastructure development as important development themes to contribute to the realization of a sustainable society as aGroup that plays a part in developing social capital, and we are working on research and development focused on theseareas.

Recent Initiatives
Decarbonization and Low-Carbon Initiatives
Improvement of Foaming Technology (Static Mixers)
By improving our Mible-eco foaming technology thatenhances mixing ability when adding water to heatedasphalt to create foam and produce mixtures, andimproving the durability of the foaming effect using
independently developed static mixers that refine thefoam, we have enhanced the workability and compaction
ability of regenerated asphalt mixtures and can transportthem over a wider area than previously.
In addition to being economical as the refinement
process is performed mechanically, this technology
reduces the impact of carbon dioxide (CO2) emissions andasphalt fumes by reducing the production temperature,
and we plan to develop it actively in the future as anenvironmental conservation technology.
*Asphalt fumes: Volatile particles, identified as toxic, generated whenasphalt is heatedTechnology to Achieve Optimization and Long Life for Road InfrastructureD evelopment of Road Surface Properties Measuring
Vehicles Equipped with AI Technology
We have developed technology for road surface properties
measuring vehicles to automatically analyze crack
percentages via AI image recognition. Furthermore, thesevehicles can automatically distinguish fading lanes (lines)
through image processing and automatically detect potholelocations using AI. We will promote further DX (digitaltransformation) in infrastructure surveys using thesetechnologies
CRACK REPAIRCRACK REPAIR is a repairing material that can be flown
naturally and injected into concrete cracks. Due to its
superior performance, roads can be opened to traffic
approximately one hour after construction works. The
product, jointly developed with TOKYU CONSTRUCTION
CO., LTD., helps to extend the life of infrastructure.

 cquisition of ISO 55001 Asset
A
Management System Certification
In March 2 0 2 1, we obtained the ISO
55001:2014 certification for our asset
management system.
By proposing optimal cost maintenanceand repair plans and VE for assets
owned by the ordering party (asset
owner), we will contribute to the
reduction of life cycle costs of theassets, increase in asset value, andefficient implementation planning, and offer the value
appropriate to the times of infrastructure maintenance.
Certified organizations: Engineering Department, Business
Promotion Division; Technology Department, Technology Division
Scope of certification: Comprehensive maintenance and proposal
with regard to roads (pavement and structures)*Obtained certification as a non-asset owner (service provider)
ISO55001
Web➡h ttps://www.seikitokyu.co.jp/dev/wp-content/themes/
twentysixteen/pdf/info/20210412.pdf (in Japanese)

Pursuit of Productivity Improvement
Development of DX (Digital Transformation) Technology
The Company has developed a management system that
optimizes the flow from transportation of asphalt mixture toleveling and rolling compaction, for the purpose of
improving pavement technology and saving labor. We havedeveloped a method to automatically control the finisher
leveling speed from the traveling position of asphalt
mixture-transporting dump trucks and verified theadaptability of the technology to construction sites.
In addition, we have developed a guidance system forrollers that reduces load by braking when a vehicle turns
and improves evenness. In the future, we will install this onrollers at actual construction sites to verify its adaptability
and effectiveness with operators.

Initiatives to Achieve the Long-Term Vision
From a long-term perspective, we have positioned development of next-generation pavement technology that takes into consideration decarbonization according to Japan’s plans to achieve carbon neutrality by 2 0 5 0 as an important topic. From ashort- to medium-term perspective, important topics include rapid population aging, decline in the work force, DX (digitaltransformation) to contribute to resolving the issue of coping with infrastructure deterioration, optimization of infrastructure development, long life of infrastructure, and improving productivity.
Investment related to intellectual property, including in research and development and study of technology, is a critical factor in our survival as a company that bears responsibility for infrastructure development. Therefore, we will continue to makeimportant investments in line with system-related development to support a new workstyle.
Key Strategies in the Medium-term Management Plan: Major Items
Create new added value by developing technologies foreseeing future changes in the role and function of road pavement.
Gain a competitive advantage to win orders of comprehensive maintenance works by further honing our technology. etc. to inspect
and analyze road conditions.
By leveraging ICT and implementing efficient operations, enhance productivity, correct long working hours, and realize eightholidays in four weeks.
Web

17Technical Information
https://www.seikitokyu.co.jp/en/products/

SEIKITOKYU KOGYO CO., LTD.

About Seikitokyu Kogyo Group

Data Section

E S G Se c t i o n

G row t h St ra te gy

Capital Policy and
Financial Strategies
Fundamental Approach
The Seikitokyu Kogyo Corporate Governance Guidelines
describe our basic capital policy-related approach as: “TheCompany considers the securing of continued growthinvestment and a strong financial base to be essential forachieving sustainable growth and improving medium- tolong-term corporate value and shareholder value. As such,
the Company shall endeavor to maintain the necessarylevel of shareholder equity and consider an appropriatebalance with capital efficiency.” Financial soundness,safety, and stability are key to a company involved in public
works projects, and capital efficiency is important as alisted company. We recognize the importance of balancing
these two aspects at a high level.

Maintain and Improve Financial Soundness
In terms of financial soundness, we have indicated thatobtaining an A credit rating is one of the targets of our WhereWe Should Be in 2 0 3 0 strategy. If we take into accountbusiness evaluations in the construction industry, we do notconsider our current equity or equity ratio to be excessive.
In order to create an optimal capital structure that offers
both stability and efficiency, we believe it is necessary tomaintain a sound financial base with a target equity ratio ofroughly 50%.

Capital Efficiency and Shareholders’ Equity Costs
With regard to capital efficiency, we have set a planned ROEof 10% in our 2030 strategy. At present, we recognize that
our shareholders’ equity costs stand at roughly 7-8% and so
we believe it is necessary to continue to maintain an ROE
level of at least 8%.
Regarding past extraordinary losses, the tax burden has
been reduced by tax losses carried forward until the fiscal
year ended March 3 1, 2 0 2 1. However, from the fiscal year
ended March 31, 2022 onward, we will no longer be able to
make such deductions, and the level of after-tax profit and
EPS is expected to decline somewhat. As a result, werecognize that ROE, which has remained high level to date,
will also inevitably decline to a certain extent. However, as
mentioned above, we will review our capital structure interms of increased dividends and acquisition of treasury
stock with a view to financial soundness and strive toensure ROE exceeds shareholders’ equity costs.

Cash Position
In addition to securing stable working capital, we need toconsider capital investment, strategic investment, andmeasures required to respond to natural disasters and anyother unforeseen circumstances. As such, we believe that
our cash position needs to be roughly twice the size of ouraverage monthly sales.
The monthly funds figure will fluctuate owing to the factthat payments for sales tend to come in primarily in the latterpart of the month while the settlement date for purchaseobligations falls in the middle of the month. Therefore, thecurrent cash balance on the balance sheet corresponds
broadly to the maximum amount of funds recorded in theaccount during a particular month.
We need to consider our funding efficiency improvement
and flexible financing, so we intend to maintain a stable cash
position by utilizing commitment lines and other channels.

Cash Flow Allocations
In Where We Should Be in 2030, the Company has set thetargets for fiscal 2030 in terms of Key Performance Indicators(KPI), which are “equity of 50.0 billion yen,” “equity ratio of50%” and “ROE of 10%.” In terms of cash flow allocations,while maintaining a total return ratio of 50% or higher, theCompany plans to allocate the remaining free cash flow ina best possible manner by finding out the best balance ofmeasures including additional shareholder return,strengthening its financial position and additional
investment, based on management decisions as occasions
arise, with a view to attaining the long-term vision.

Shareholder returns
With regard to the distribution of profits, the Company has abasic policy of implementing stable and continuous
shareholder returns while comprehensively taking into
account the business results for the current fiscal year,
financial condition, future business environment, etc., whilestrengthening the management base for sustainable growthand maintaining and improving profitability. Under the“Medium-term Management Plan (FY2021 - FY2023)” whichstarted from the fiscal year ended March 31, 2022, theCompany revised its policy on shareholder returns to “stable
and continuous shareholder returns with a target payout
ratio of approximately 30% and a target total return ratio of
50% or higher” in a change from the former target of “total
return ratio of approximately 30%,” and is striving to further
enhance shareholder returns.
Based on these policies, the dividends for the fiscal year
ended March 31, 2022 were 30 yen per share (total return
ratio of 35.4%), and the Company purchased its own sharesat a total cost of 2.5 billion yen. As a result, the total
shareholder return ratio was 109.6%.

Dividend Per Share, Dividend Payout Ratio, Total Shareholders Return
Dividend per share

Dividend payout ratio

47

109.6%

43

30
30.5%

33.5%

28.9%

33.5%

FY2019FY2020(Yen)

Total shareholders return

30
57.4%

35.4%
FY202133.4%

FY2022 (Est.)(Reference: Calculation of shareholders’ equity costs)*Calculation of shareholders’ equity costs uses the capital asset pricing model (CAPM) and is estimated using values including the Company’s shareprice fluctuation rate and the fluctuation rate of the stock market overall in the expected rate of return for stable assets such as government
securities and the stock market’s risk premium.
[Shareholders’ equity costs = Risk-free rate + risk premium × beta]
Risk-free rate: 0.4%-0.6%
Risk premium: 6.1%-6.2%
Beta: 0.74-1.18*Shareholders’ equity costs: 7.2% < Planned ROE value for fiscal 2023: 8.6% < Target ROE value to achieve in the future: 10.0%*As there is no significant fluctuation in shareholders’ equity costs, the estimated value is the same value as when the plan was formulated.
Corporate Report 2022

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E S G S e c ti o n

I n t ro du c t i o n

About Seikitokyu Kogyo GroupG ro w t h St r a t e g y

ESG Se c t i on

Data Section

Materiality of Seikitokyu Kogyo Group

Our Stance on Sustainability

Important Themes and the Group’s Goals

The corporate philosophy, “A life infrastructure building company that helps to create affluent local communities,” forms thebasis of Seikitokyu Kogyo Group’s business activities. For more than 70 years since the founding, the Group has been offeringhigh quality services for social capital development, which resulted in a steady growth of its business. While road construction
constitutes the main line of its business, the Group also engages in civil engineering works, works related to water use andenvironment, and pavement materials manufacturing and sales.
Due to the recent acceleration of changes in the social environment, businesses today face diverse expectations andchallenges. Nevertheless, our mission remains unchanged, which is to sincerely fulfill its responsibilities as a company thatplays a part in social capital development and to keep supporting the foundations of people’s lives and business activities.
In the long-term vision, we have set “A truly strong corporate group that pursues personal and corporate growth in tandem
and helps realize a sustainable society” as Where We Should Be in 2030. The vision illustrates our intention to secure anddevelop human resources; strengthen our business foundation while valuing engagement with a wide range of stakeholders,such as customers, business partners, and local communities; and constantly address social issues.
We will continue to strive for fair business administration, as well as creation of a healthy and satisfying workplace, where
employees and other actors in our business can fully demonstrate their abilities. In addition, we will work on further
improvement of quality and safety, as well as reduction in the environmental burden, to contribute to the achievement of asustainable society through our business activities.

Sustainability of the Company

The Group has identified materiality for the achievement of both a sustainable society and a sustainable growth of the Group.
The relevance of our contribution to sustainability to the SDGs is shown below.
ESG Initiatives

E

Important sustainability theme

Our way to 2030

Environmental

Contributing to the environment by reducing the environmental impact
through our business activities and that of our own business activities
Contribute to the development of infrastructure related torenewable energyC ontribute to the establishment of a recycling-oriented society byrecycling and efficiently using resources and reducing waste
Contribute to climate change mitigation by promoting low
carbon and zero carbon
P15,16,17,21,22


protection

Sustainability of society

Infrastructure

Relevant SDGs

Helping develop infrastructure that can be used safety, securely,
and comfortably by all people
Leverage our technologies in a wide range of fields, such as
disaster prevention and mitigation, deterioration of infrastructure,traffic safety, environment, and water use

P3,4,23

Initiatives to address ESG issues = Materiality

Natural disasters
Process to Identify Materiality
Based on the 17 SDGs and 169 targets, etc., we extracted social issues the Group should address, responsibilities the Groupshould fulfill in addressing them, and what the Group should develop (work on) to address them. What have been extracted
were systematically organized into six items to constitute materiality, in light of various factors including a medium- to long-term
picture of society, our business model, our strengths, and importance to the Company and society. After discussing the matterin relation to medium- to long-term management policies and management plans, the Board of Directors finalized the items asimportant sustainability themes that set directions for the Group to realize our Where We Should Be in 2030 strategy.

STEP 1

STEP 2

STEP 3

STEP 4Creation of a list ofprospective issues(Extraction of issues)

Prioritization

Confirmation of
appropriatenessApproval by the
Board of Directors

We extracted 33 types and 56

We set priorities to the extracted

The long-term vision development

After multiple discussions, theitems of social issues the Groupissues in light of impact on society

project COMPASS2030 confirmed

Board of Directors approved

should work on and take intoand management; restructured

the alignment with issues to workand determined the materiality

consideration, in relation to boththem based on relevance to eachon to realize our Where We

along with the long-term vision,

input to and output from businessother; and brought them together

Should Be in 2030 strategy.

regarding it as a prerequisite foractivities.

into six themes.

SEIKITOKYU KOGYO CO., LTD.

S
Helping create a better living environment as a good corporate
citizen and local community member

Local residentsR educe noise, vibration, dust, smoke, accidents, etc.; engage insocial contribution activities

P25
Creating working environments with which everyone feels satisfied
and transforming into a company that attracts leaders

Job satisfaction

G

Governance andcomplianceBe a healthy, strong, and considerate company friendly toemployees and their families
Correct long working hours, achieve gender equality, etc.
Establish an environment where employees can choose how
close they live from the workplace and achieve work-life balance
P25,26,27,28,29,30
 ursue the best governance for the GroupP
Regain trust by promoting compliance management
P31,32,33,34

and an integral par t of theachievement of the vision.

19

Helping restore regional economic activity and livelihoods throughrestoration and reconstruction work in the event of a natural
disasterBe a disaster-resistant company and ensure contribution intimes of emergency
P3,4,18,24

Web

Seikitokyu Kogyo Group and SDGs
➡ https://www.seikitokyu.co.jp/sustainability/sdgs/ (in Japanese)
Corporate Report 2022

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E S G S e c ti o n

I n t ro du c t i o n

About Seikitokyu Kogyo GroupG ro w t h St r a t e g y

ESG Se c t i on

Data Section

Environmental
Global Environmental Protection and Climate Change

Environmental protection
Environmental Policy
1. SEIKITOKYU KOGYO CO., LTD. (the “Company”) engages in design and construction of pavement and civil engineering
works, research and development of technologies, and manufacturing and sales of pavement materials as its main linesof business. The Company works to reduce the environmental impact in all business activities, protect the global
environment, and establish a recycling-oriented society.
2. The Company takes the following actions to strive for constant improvement of its environmental management systemand prevention of environmental pollution.
(1) Promote appropriate disposal of industrial waste (2) Reduce CO2 emissions(3) Promote resource saving, energy saving, and recycling(4) Engage in research and development of environmentally friendly technologies
3. The Company complies with relevant legal regulations on the environment and other requirements it agreed on.
4. To attain the environmental policy, the Company sets environmental goals within the scope that is technologically andeconomically possible, strives to achieve them, and reviews them on a periodic basis.

‌ ased on the recognition that protection of the global environment constitutes an important business challenge, we take variousBmeasures to reduce the environmental impact and contribute to environmental protection. Specific measures include improvementof manufacturing facility functions, which takes place simultaneously with facility upgrade; replacement of fuels; and introduction ofsolar power generators. They are taken in the process of promoting growth strategies, with an eye on long-term prospects.
Major Facility Upgrade in FY2021
Construction of the new central Kanagawa businessoffice in Atsugi, Kanagawa was completed in March
2022.
Solar power equipment is installed in the office, and
it is an environmentally friendly, disaster-resilientbusiness office, in a strong building with raised floors,
in consideration of its location near the river.

Environmental Management System‌Seikitokyu Kogyo has implemented an environmental management system covering the head office and all branches, businessoffices, and mixture plants. Following the PDCA cycle, we strive for a constant improvement of environmental protection activities.

OfficeCompany dormitory

Organizational Structure
Committee on Environmental Measures
Meets twice a year
Members: Representative Director; officers
in charge; General Manager, Engineering
Department; General Manager, Technology
Department; General Manager, ProductBusiness Department; General Manager,
General Affairs and Personnel Department;
General Manager, Safety, Environment, andQuality Department; other persons
designated by the Committee Chair

Corporate manager: President
General manager: General Manager, Business Promotion Division
Manager (head office): Department managers

Manager (branches and business departments): Branch
General Manager; General Manager, Construction Department

Each department and officeAcquisition of ISO 14001 Certification
Since April 2004, we have an environmental management
system based on ISO 14001 in place. Periodic audits byexternal auditors and internal audits by internal auditors
facilitate the appropriate implementation and sophisticationof the system.
As of March 31, 2022, we have acquired the ISO 14001:
2015 certification for the head office, branches, and offices(excluding some departments) in Japan.

Reduction of CO2 Emissions
As environmental problems have worsened on a global scale and addressing them has become a common important challenge
across the world, we consider it natural as a business operator to work on the reduction of CO2 emissions.

Results of the Most Recent External Audit

While asphalt material plants are the main source of CO2 emissions at the Company, other sources include heavy equipment

Sixth Recertification Audit in 2022

for construction works, offices, and vehicles for travelling. In the environmental management system, each department sets out

Good Improvement Observation Improvement
neededCategory practice
opportunity(Nonconformity)
No. of cases
Web

1

6

0

their policies and works on the control and reduction of CO2 emissions.

0

Sustainable Management Strategy Project

ISO14001
https://www.seikitokyu.co.jp/company/iso(in Japanese)

Permission to Engage in the Industrial Waste Disposal Business‌ e have the permission to engage in intermediate processing of industrial waste at 21 facilities in 16 administrative districts,
W
where construction waste, etc. is recycled.
As of March 2022, 14 of these facilities in 11 administrative districts have been certified as excellent industrial waste disposal
operators.

In pursuit of the Where We Should Be in 2030 strategy and further increase in corporate value, we reorganized and systematizeddevelopment of the former SX promotion project and DX promotion project as the Sustainable Management Strategy Project inApril 2022.
We are now considering specific initiatives to achieve the reduction targets obtained by our SBT certification in August 2022
and would also like to be able to report on our emission reduction plan at the earliest stage possible.
To achieve carbon-neutral business operation, our Group promotes specific initiatives led by this project. To begin with, we
aim to achieve reduction targets that meet SBT standards and will continue to accelerate preparation for information disclosurein line with the Task Force on Climate-related Financial Disclosures (TCFD).

*Excellent Industrial Waste Disposal Operator Certification System: A system where prefectural governors and designated city mayors accredit industrial waste
disposal operators that conform to the Criteria for Industrial Waste Disposal Businesses with Excellent Capabilities and Track Record (Excellency Criteria)*Science Based Targets (SBT): Targets to reduce greenhouse gas emissions that are aligned with the level required in the Paris Agreement and are set
by businesses for a 5- to 15-year timeframe.

Measures to Reduce Waste

Greenhouse Gas Emissions and Reduction Targets

To reduce the final disposal volume of waste, we proactively
take the measures listed below.
Recycle all concrete and asphalt waste
Simplify the packaging of procuring materials
Prevent reworking and returning
Promote sorting activities

21

Rebuilding the Head Office Building
For some time, the Company had
been reconstructing the head
office building, built half a century
ago, as part of its 70th anniversary
project. Construction was
successfully completed in June
2022, and business began in the
new head office building on
September 20.
The new head office building
was planned and designed tooffer a secure and comfortableworkplace environment for
employees and, with reduced
environmental impact and energy
consumption, to be certified as“ZEB Ready.” Furthermore, wehave planned to reduce actualenergy use to the level of “Nearly
Photo of the completed head
ZEB,” possibly by using
office building
unaccredited technologies. In
addition, the building demonstrates excellent earthquake-proof
performance and is equipped with facilities to tackle flooding,
supply electricity, and secure water supply and drainage. It has
been remade into a head office building worthy of being a locationfor our business continuity plan (BCP).

SEIKITOKYU KOGYO CO., LTD.

Waste Volume (Non-consolidated)

CO2 emissions in fiscal 2020

Reduction targets for the 10 years leading up to fiscal 2030

CO2 emissions in fiscal 2021

50,751 t

Reduce total emissions for Scope 1 and Scope 2 by a yearly average of 4.2%, andby 42% in the 10 years leading up to fiscal 2030. [Level of 1.5 ]

47,721 t

FY

2019

2020

2021

Scope 1

Volume of industrial waste

212,884t

288,214t

342,953t

Scope 2

12,405 t

Volume of general waste

416t

454t

277t

Scope 3419,722 t

Rate of recycling

98.3%

97.9%

96.4%

Category 1

356,629 t

Reduce emissions related to purchased products and services, classified into
Category 1, by a yearly average of 2.5%, and by 25% in the 10 years leading up to
fiscal 2030. [Level of Well Below2 ]11,256 t
370,440 t
306,426 t

Corporate Report 2022

22

E S G S e c ti o n

I n t ro du c t i o n

About Seikitokyu Kogyo GroupG ro w t h St r a t e g y

ESG Se c t i on

Data Section

SocialEnvironmental Considerations

Infrastructure

To continue business activities, coordination with partner companies is also essential to initiatives to reduce environmental impact.
For example, we have asked for cooperation in reducing packaging materials for construction materials procured by the Company
since October 2011 and are working on waste reduction with all our suppliers.
The Group will continue to contribute to the realization of a sustainable society along with all parties comprising the supply chain
in the future.

Quality Assurance
Quality Policy

Web“Satisfy customers and win trust from them”
1. We think from customers’ perspectives and offer products that satisfy them.

Initiative to Reduce Packaging Materials (Request)
https://www.seikitokyu.co.jp/assets/file/pdf/company/iso/konpou.pdf (in Japanese)

Ensuring an Appropriate Wage Level for Technical Workers

2. We constantly improve the effectiveness of the quality management system.

Quality Management System‌ s a construction company that plays a part in developing roads and other social infrastructure, Seikitokyu Kogyo hasAestablished and implemented a quality management system covering head office departments, branches, and businessoffices engaging in the construction business, to continue offering the stable quality and services that meet customers’
expectations. Following the PDCA cycle, we constantly improve the system.

One social issue is ensuring an appropriate wage level for technical workers and improving their treatment, with a view to securing
future leaders. By reliably paying the necessary labor costs (labor wages) for increasing salaries to a level commensurate withtechnical skills, we will promote a virtuous cycle as a prime contractor. Therefore, the Company released its “Declaration of Respectfor Labor Cost Estimates” on July 20, 2020.
Web

Declaration of Respect for Labor Cost Estimateshttps://www.seikitokyu.co.jp/dev/wp-content/uploads/2020/07/20200717.pdf (in Japanese)

Natural disasters

Organizational Structure
Corporate manager: President

Support to Disaster Restoration and Reconstruction

General manager: General Manager, Business Promotion Division
Manager (head office): Department managers

Manager (branches and business departments): Branch
General Manager; General Manager, Construction Department

Each department and officeAcquisition of ISO 9001 Certification
Since March 1998, we have a quality management system
based on ISO 9001 in place. Periodic audits by external
auditors and internal audits by internal auditors facilitate theappropriate implementation and sophistication of the system.
As of March 31, 2022, we have acquired the ISO 9001:2015
certification for the head office, branches, and offices(excluding some departments) engaging in theconstruction business.

Results of the Most Recent External Audit
Eighth Recertification Audit in 2022
Good Improvement Observation Improvement
Category practiceneededopportunity(Nonconformity)
No. of cases
Web

3

3

0

0

https://www.seikitokyu.co.jp/company/iso(in Japanese)‌Collaboration with Partner Companies
Partner companies are vital to our business. They are suppliers of materials and equipment, and also provide us with technology
and skilled labor. Collaboration with partner companies is essential in particular to ensure health and safety in our business activities.
We engage in a range of activities, including joint safety patrols and technical training at our training center (training for mastering
basic skills, obtaining qualifications related to civil engineering construction methods, and acquiring ICT construction and othercutting-edge skills), with member companies of the Seikitokyu Kogyo Accident Prevention Association established in 1994.
A mutual aid society established in 1976 was the predecessor organization of the Accident Prevention Association. As of
March 31, 2022, the Association consists of 824 member companies.

“Paving machinery and civil engineering project training for supervising engineers” organized by the
Accident Prevention Association Headquarters
SEIKITOKYU KOGYO CO., LTD.

July 20, 2022
We received a letter of appreciationf r o m t h e To h o k u R e g i o n a l
Development Bureau of the Ministryof Land, Infrastructure, Transport
and Tourism thanking us for the
restoration of the area struck by theearthquake off the Coast of
Fukushima Prefecture that occurredin March 2022.

ISO9001

Supply Chain

23

Construction companies are expected to support restoration and reconstruction after natural
disasters, such as earthquakes, torrential rains, and heavy snowfalls. Through businessactivities, our Group has eliminated road obstacles, removed and taken in rubbles, andoffered other types of support in many disaster-affected areas.
In addition, we directly and indirectly help the restoration and reconstruction of disasteraffected areas by donating aid money and essential supplies through the Tokyu Group,industry groups, etc.
Not only the Company but also our subsidiaries based in areas such as Kumamoto,
Miyagi, and Iwate play an important role in such activities. The Seikitokyu Kogyo Group willremain to be a healthy corporate group that plays a part in infrastructure development andcontinue to sincerely meet the expectations from society.

Accident Prevention Association
newsletter‌Business Continuity Plan
We have had a business continuity plan (BCP) since the past, based on the recognition that
continuing with our business even in the case of natural disasters or other contingencies and fulfillingthe social responsibility as a company links directly to the reason we exist.
External Evaluation
In 2009, we received the Certificate for Basic Business Continuity Capabilities from the Kanto
Regional Development Bureau, Ministry of Land, Infrastructure, Transport and Tourism (MLIT).
Since then, we have undergone reviews for renewal every other year up to 2021. We have also
concluded agreements on emergency response to disasters with National Highway Offices of
MLIT and other entities in charge of road management.
Information Security
Item (10) of the Seikitokyu Kogyo Group Compliance Code of Conduct states that the Company strives “To seek to use
electronic information fairly, maintain trust, and ensure confidentiality.” This clearly indicates our basic policy that we willseek to understand laws and the Company’s rules, and will work to preserve and ensure the security of electronic
information.
In addition to establishing and applying regulations for basic matters regarding the handling of electronic information andelectronic equipment and information security, the Company works to minimize risks related to information security byundertaking specific initiatives to understand threats and risks of damage and violations, and to consider and implement
countermeasures, as well as implementing training for all executives and employees, and regular system audits, and taking
out insurance against cyber risks.
Corporate Report 2022

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E S G S e c ti o n

I n t ro du c t i o n

To facilitate understanding of infrastructure and our business, we invite residents in the neighborhood, children, and students
for site visits during and after construction and conduct other activities including implementing internships and cooperating inschool education. Such activities not only help us secure and develop next-generation supporters but also spread
understanding of infrastructure development, thereby contributing to the achievement of a sustainable society.
Okayama Road Patrol Crew
Regarding the 5th Infrastructure Maintenance Award jointly sponsored by the
Ministry of Land, Infrastructure, Transport and Tourism and other related
government agencies, the Okayama Road Patrol Crew in which the Chugoku
Shikoku Branch of the Company participates won an award in the maintenancesupport category. This activity, started in April 2017, is a five-year initiative throughthe cooperation of industry, government, and academia to form a consortium on the
topic of infrastructure deterioration. Its participants are Okayama high school
students studying civil engineering; the Okayama National Highway Office,
Chugoku Regional Development Bureau of the Ministry of Land, Infrastructure,
Transport and Tourism, which manages the roads; and road companies thatconserve and maintain the roads in the jurisdiction. The social infrastructure
maintenance activity uses smartphones—ICT devices familiar to the students—todiscover and report on road abnormalities through patrol inspections. The activity
won the award on this occasion in recognition of its achievement in maintaining
maintenance expertise while evolving it in the form of learning and of striving tocultivate next-generation engineers. It also won the OKAYAMA SDGs AWARD 2021
from the city of Okayama as an example of an especially excellent SDGs activity.

Data Section

1. We strive to prevent accidents by eliminating occupational safety and health hazards and utilizing risk assessments tomitigate risks.
2. We comply with laws and regulations, as well as internal rules, related to occupational safety and health.
3. We establish an occupational safety and health management system and constantly improve the system.
4. A ll our officers, employees, temporary employees, and contract employees, as well as employees of partnercompanies who work under our supervision, will work to ensure occupational safety and health.

Occupational Safety and Health Management System‌ eikitokyu Kogyo Group Compliance Code of Conduct states that the Company strives “(1) To recognize that safety always
S
comes first when executing our business” and “(9) To provide and preserve fine, healthy workplace environment.”
To prevent occupational accidents, we have established and implemented an occupational safety and health management
system covering the head office and all branches, business offices, and material plants. Following the PDCA cycle, weconstantly improve the system.
Organizational Structure
Safety and Health Committee
Meets once a year
Members : O fficers in charge; industrial
physicians; per sons incharge of managementfrom the head office;persons in charge of healthmanagement; otherdesignated persons

Corporate manager: President
General manager: General Manager, Business Promotion Division
Manager (branches and business departments): Branch
General Manager; General Manager, Construction Department

Manager (head office): Department managers

Each department and office

Locally Rooted Activities

Acquisition of ISO 45001 Certification
Case Studies
Sakura material plant

Yamato material plant(Chiba, with “CHI-BA+KUN”)(Kumamoto, with “Kumamon”)

Job satisfaction
Putting People-Centered Management into PracticeI‌n presenting Where We Should Be in 2030, we sent a clear message within and outside the Company that the most importantmanagement resource for us is people, and that the Company will grow further when there is a corporate culture of highemployee engagement and each employee fully demonstrates their abilities honed through an extensive education system.
Putting people-centered management into practice and enhancing capabilities of the entire organization will be the key toincrease corporate value.
Based on the recognition that the growth of individual employees leads to the development of the Company, we listen to thevoice of employees, create systems to place the right people in the right jobs and let them fully demonstrate their abilities, andtake other measures to encourage self-sustaining growth of employees.

SEIKITOKYU KOGYO CO., LTD.

ESG Se c t i on

Occupational Safety and Health Policy

Site Visits

25

G ro w t h St r a t e g y

Safety and Health

Local residents

As we declare to be “an infrastructure building company
that helps create affluent communities,” each officeengages in locally rooted business activities at each site.
As a member of the local community, they conclude
agreements on disaster restoration, organize site visits
and cleaning activities, and participate in and offer
support to community activities, not to mention engage
in emergency disaster restoration works. A wide range ofrecent initiatives include painting a picture of a local
mascot character on the renewed plant wall. Each officethus uses their ingenuity to be favorably accepted by
local communities.

About Seikitokyu Kogyo Group‌ ince June 2018, we have an occupational safety and health management system based on ISO 45001 in
Splace. Periodic audits by external auditors and internal audits by internal auditors facilitate the appropriate
implementation and sophistication of the system.
As of March 31, 2022, we have acquired the ISO 45001:2018 certification for the head office, branches,and offices (excluding some departments).
Results of the Most Recent External Audit The 1-1st surveillance audit in 2022
Category

Good practice

Improvement
opportunity

Observation

Improvement needed(Nonconformity)

No. of cases

2

8

2

0

Web

ISO45001
https://www.seikitokyu.co.jp/company/iso(in Japanese)

Safety Initiatives
We are working on improving occupational safety and health throughvarious activities such as daily safety management at construction
sites; safety inspection tours by responsible departments at all
offices, branch offices, and the head office; coordination with theAccident Prevention Association; onsite inspections by executives;and patrols by female employees.
Number of Accidents (Non-consolidated)

An onsite inspection by executives Plant patrols by female employees

2019

2020

2021

Occupational accidents (absence from work for four or more days)

8

4

4

Public accidents

56

46

49

Traffic accidents

63

63

50

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I n t ro du c t i o n

Satisfying Work Environment‌ he workstyle reform project, launched in May 2017, has introduced a range of systems and policies, focusing on the correctionTof long working hours and the realization of a five-day workweek. Specific initiatives include those directly linked to the shorteningof working hours, such as commuting to construction sites directly from home, introducing mobile personal computers, strictly
managing working hours through personal computer log management, and discussing reform together with partner companies.
In addition, the project engages in activities that look ahead to diverse workstyles of the future, such as staggered working hours
and remote working.
In April 2022, we extensively reorganized previous project activities and clarified the position of the workstyle reform project asa structure to promote various policies for the individual strategy in the Medium-term Management Plan of establishing new ways
of working that help improve productivity. In recent years, the COVID-19 pandemic unexpectedly drove us to adopt workstyles
that are flexible in terms of time and location, including remote working and online meetings. Taking such changes in a positive
way, we would like to accelerate the reform, without missing the opportunity.
2019

2020

Achievement Rate of a five-day workweek (Non-consolidated)

2021

Construction Target 840 hours/year 780 hours/year 720 hours/year
departments Achievement rate
90.3%
85.8%
77.9%

2019
TargetAchievement rate

2020

2021

6 days off in 4 weeks 6 days off in 4 weeks 7 days off in 4 weeks
96.0%

94.8%

90.7%

Target 720 hours/year 720 hours/year 720 hours/year
Products
departments Achievement rate
100.0%
100.0%
100.0%‌ e recognize that promoting the employment of people with diverseWbackgrounds is essential in continuing to secure human resources and create
value. Since several years ago, we have been actively hiring women, foreign
nationals, and people with work experience. In addition, we strive to foster aculture where employees accept and respect each other’s differences,regardless of gender, age, or nationality, and to create an environment where
each employee can demonstrate their abilities to the fullest.
Initiatives for diversity promotion progressed in the “Securing Leaders
Project” launched in 2020. The project was reorganized and systematized as
the Diversity Promotion Project in April 2022 in light of its importance, and its
promotion structure was made clear. The Company has previously implemented
training for corporate managers and senior executives that let them becomeaware of unconscious bias hindering the empowerment of women, held classes
by Outside Director Rena Shimizu for female employees, and conductedtraining courses and discussions between senior executives and all
Myanmarese employees, as part of initiatives to change the mindset in the
Company. In the future, we will further accelerate initiatives for diversity
promotion, with a focus on new projects.

‌ e encourage self-sustaining growth and career development ofW
employees by offering various education and training opportunities toselected personnel and employees eager to learn, in addition to job- andrank-specific education, so that employees can develop management
skills, obtain qualifications, and gain expertise.
In the next-generation leader development training and successivegeneration leader development training for prospective branch generalmanagers and next-generation and successive-generation corporate
leaders, we offer the opportunity to gain a broad, future-oriented corporate
view from the corporate manager perspective, as well as to enhancestrategic thinking and insight into business and build the foundation as acorporate manager.
A number of support systems for obtaining qualifications are also inplace to enhance employees’ expertise and skills, such as relevant
training, opportunities to take correspondence courses, and payment ofsubsidies.
Web

Presentation by participants in next-generation leader
development training

Education System
https://www.seikitokyu.co.jp/recruit/system.html (in Japanese)‌ or a company to secure human resources and maintain competitiveness, it is essential to create an employee-friendly workplaceF
environment.
We strive to create a satisfying workplace environment by establishing and implementing an occupational safety and healthmanagement system and introducing relevant systems and policies, such as the Occupational Safety and Health Committee,
health checkups, mental health care, and support for childcare and nursing care.
Improving the workplace environment in terms of safety, health, and comfort is also imperative in the tangible aspects that
support our business. Over the past few years, we have been proactively working on the rebuilding and upgrading of not only
manufacturing facilities but also office buildings and other facilities.
In addition to the completion of construction on the new head office building in June 2022, the Yokohama Branch and the Hokuriku
Branch relocated in fiscal 2021, and in fiscal 2022 too, plans are underway for the relocation and renovation of several offices. We
will continue to work systematically on improving the work environment throughout the Company.
Holding classes for new female employees

Employees Who Took Maternity Leave and Childcare Leave (Non-consolidated, including Contract Employees)

Target Indices
Plan of Action for General Business Owners (2021.4-2024.3)
Percentage of women among new
graduates recruited of 15% or more
Where We Should Be in 2030
Target for number of women on an
executive career pathPresent: 2 persons in FY2021 7 persons
in FY2030

Fair Evaluation and Engagement‌ o achieve the management plan of the Company, our management by objectives system sets specific and clear goals forT
individual employees, after linking them to organizational goals. To evaluate employees fairly, we strive to implement the system in
an impartial and reasonable manner by properly taking into consideration not only the results against the goals but also theprocess and actions that led to the results.
In fiscal 2021, we introduced a regular employee engagement survey as a way to understand how employees see the Company.
While the score itself is only for reference, we intend to put the information to use in solving problems to improve employee
engagement by analyzing the results as an index for visualizing existing conditions of our organization to identify our strengths andweaknesses.
Results of the engagement survey in November 2021 Engagement rating: B
Of the 11 levels, B is the sixth level from the top in the appraisal of the survey service provided by an external expert
organization. In a comparison with data collected from over 2 million people, the Company was placed roughly in the
middle, and issues were extracted linked with management problems, including those relating to securing technicians
and rectifying long working hours.

SEIKITOKYU KOGYO CO., LTD.

Data Section

ESG Se c t i on

Creating a Safe and Satisfying Workplace Environment

Diversity & Inclusion and Empowerment of Women27

G ro w t h St r a t e g y

Education and Training

Workstyle Reform and Work-Life Balance

Achievement Rate of Overtime Hour Targets (Non-consolidated)

About Seikitokyu Kogyo GroupNo. of employees who took maternity leave

2019

2020

2021

4

5

7

Average Years of Service and Turnover Rate (Non-consolidated)
2019

2020

2021

Average years of service

15.7

15.2

16.0

Turnover rate (voluntary resignation)

3.2%

3.7%

3.3%

Respect for Human Rights‌ s the basic policy concerning the statement, “(9) To provide and preserve fine, healthy workplace environment,” in ourACompliance Code of Conduct, we clearly state, “We respect each person’s human rights, aim to create a healthy and positive
workplace environment, and strive to constantly improve the environment,” “Under any circumstances, we will not tolerate
discrimination or harassment on the basis of age, gender, place of origin, belief, religion, or disability,” and “We will prevent andeliminate sexual harassment through actions based on the correct understanding of gender difference.” We thus strive to prevent
direct and indirect violation of human rights.
Specifically, our employees undergo education to prevent human rights violation in the induction training and rank-based
training. Compliance and sexual harassment hotlines offer a system where anyone can feel secure to consult about such issues.
We thus strive to create and maintain a healthy workplace environment.

Employment of Persons with Disabilities and Creating Employment Opportunities on Farms for Persons with Disabilities
As part of our initiative to promote employment of persons with disabilities, we opened Itabashi Farm, our farm using rental
farmland, in December 2021. By hiring persons with disabilities as staff at the farm, we will help them become economicallyindependent and further promote understanding of persons with disabilities among our employees. In addition, we will also
contribute to the local community by donating the fruits and vegetables cultivated in cooperation with the farm staff toneighboring welfare institutions.
In the past, there was a time when the Company’s employment rate of persons with disabilities stood below the statutory rate
because it is difficult for them to work at construction sites and plants. Going forward, we will continue to promote theemployment of persons with disabilities and ensure an employment level exceeding the statutory rate through such initiatives.

Corporate Report 2022

28

E S G S e c ti o n

I n t ro du c t i o nSpecial Report:

A Conversation on D&I

Improving the Effectiveness of Women’s Empowerment
Promotion to Establish a Human Resource Pipeline
Outside Director

Representative Director

Conversation Taira Yoshikazu
Rena Shimizu
We asked President Taira, who is striving to makethe Company the number one in the industry for
women’s empowerment, and Outside Director Rena
Shimizu, advisor to the Diversity Promotion
Project, about the current state of women’s
empowerment in the workplace and prospects forthe future at Seikitokyu Kogyo.

The Endeavor to Cultivate Women Leaders——Ms. Shimizu, you were appointed as Outside Director in
2020. Was it an unexpected personnel appointment, consideringthat this is a road pavement company?
Shimizu: I went to greet everyone after I took office as an

Outside Director, and not a few people were surprised: “Aroad pavement company? Wow.” It seems many people
have an image of road pavement as being somewhat
removed, but roads are actually a very familiar presence.
We walk on them every day. My working at the Company
seemed to have an impact on everyone around me, andpeople often asked, “Does your appointment as Outside
Director mean they’re working on women’s empowerment?”
I answered, “Of course, that’s right.”——What was your impression of the Board of Directors inthe beginning?
Shimizu: All the other Directors were veteran men, and I was

the only woman. To be honest, I felt a sense of inferiority
about my lack of experience. However, going back to thestarting point that I was appointed in the hope of bringing
diversity to management helped me see the role I had toplay. Human resources and empowerment of women are
the distinctive features of my skills matrix, so I try to keepthat in mind when making comments.

——What kind of efforts have you made as an Outside
Director who is well-versed the field of promoting women’s
empowerment?
Shimizu: The first thing I said was that it’s important for men,
who are the majority group accepting the women, tochange their way of thinking, particularly the bosses. So, in
2020, we held a study group on diversity management for
department heads and above, and I served as the lecturer.
Taira: Your lecture was very fresh. Although we understoodin theory, we had no real experience, so there were things
that we felt were eye-opening. Also, the Company has
women in management positions, although there are only a
few of them, so I asked Ms. Shimizu to interview them
privately. It’s great to see her succeeding as a Director, andshe has forged her own path in life up to now. She is truly aliving example. I hope she will have a good influence on
female employees and that she will stir their hearts.
Shimizu: Two women were promoted to section chief in 2020.

They were the Company’s first female section chiefs, so I
suggested that they should experience training for women,
bringing together people from inside and outside theCompany, and they underwent a program to learn about
leadership for six months. We plan for other female
employees to follow to take the course as well.
Since our organization is largely made up of men, andwith no role models to look up to, I think that it is difficult for
women to play an active role with a sense ease. Looking atother industries, there are many successful female leadersin the same generation, so mingling and studying with themwill be very motivating.

Managing Both Career and Life Events——About 20% of new employees are women. Are young
female employees gradually gaining greater presence?
Taira: As expected, since Outside Director Shimizu joined
us, the atmosphere of the Board of Directors has changed
considerably. She is very studious and she makes in-depth
comments from a diversity perspective. There’s no doubtthat discussions have become livelier.

29

SEIKITOKYU KOGYO CO., LTD.

Shimizu: When I became an Outside Director, the first thing I

did was to go to see road pavement construction. On thattrip, I greeted a security guard at the construction site andtold him I was from Seikitokyu Kogyo. And the security
guard said to me, “Did you come from the head office? The
young women at Seikitokyu work really hard! They deserve
to be praised.” That really left an impression on me.

About Seikitokyu Kogyo GroupG ro w t h St r a t e g y

ESG Se c t i on

Data Section

When I talk with new female employees, they sometimes
tell me, “When I look over my shoulder, I see the road I justlaid behind me. Building roads is an amazing job, and thatis what inspires me.” Building things is precisely the
motivation behind their work.
Taira: The mindset for the work of building roads is nodifferent for men and women. If anything, women might
have stronger ambition to build roads, because they
deliberately take the leap into sites where they are aminority.
In that sense, they have to set their career paths from along-term perspective, considering the next 20 or 30 years.
Management must also be prepared for this.
Shimizu: In road pavement work, there’s a unique concept oftime and place. The location of work sites changes
constantly, and the construction takes place not only in thedaytime but also at night. It’s a fact that you have thedifficulty of dealing with constraints in time and place.
It was an important precondition for male workers until
now to handle these changes in time and place flexibly, but
this will change in the future. Along with women’s social
advancement, men also have to take on housework, andthe new common practice among young people is formarried couples to split chores and childcare. The need tocare for aging family members can also arise regardless ofgender. Managing both life and career events is no longer
an issue only for women.
We’re now advancing workstyle reform across theCompany. A workplace where it’s easy for women to work is
one where it’s easy for all employees to work. We’re working
with the idea that it would be nice if, as a result efforts inpolicies to enable employees to manage both their careersand various life events, we can foster a corporate culture
where all employees can continue working in the way that’s
right for them and remain active for many years.

Training People on a Long-Term Timeline——What are some of the issues pertaining to diversity
promotion going forward?
Taira: When you attend general meetings in the industry
and take a close look, sometimes you find there isn’t even asingle woman among the hundreds of attendees. When you
think about it, this is a pretty strange situation. I think theroad industry is the latest bloomer in terms of women’s
empowerment. In many ways, we are now at a critical stage
that our organization must overcome.
Shimizu: We are still in our early days of actively recruiting
women, so there are no women in positions to give theiropinions to management. That’s why, when I meet female
employees, I try to ask them if they’re having any trouble
and if they’re okay. Also, since there are more young female
employees, the issue of how they will manage childbirthand childcare with their careers will inevitably arise.
Taira: I think a 30-year stance is necessary to normalize diversity.
It will also take 30 years for these women joining the Company
now to become executives of the future. If you calculate
backwards, now is a truly important moment. Unless these
women remain with us to build their careers, they can’t
pass the baton, so the Company would also have to startover from scratch. That’s why we absolutely cannot cut
corners. I also go to work sites to talk to female employees
individually. The women are working hard, and I’m serious
about it too.

Shimizu: Having had the chance to be involved in the
Company, I think its stance on human resource training is
especially wonderful. There’s a strong culture of cultivating
employees from a medium- to long-term viewpoint,
regardless of whether they are men or women. When new
employees join the Company, they are given proper
experience and are carefully nurtured. This comes acrosscontinuously.
But when women join this process, things are not that
simply. Life events like childbirth and childcare crop up
along the way, which create periods away from work. The
Company isn’t used to handling that. At the root is a
corporate culture that really values human resources, so I
think, with time, the pace of women leaving work
temporarily and coming back again will become nothingout of the ordinary. It’s a matter of time and experience.

——Is it an issue that can be solved through the effective
use of maternity leave and childcare leave?
Shimizu: Like other large companies, we have a sufficiently
well-arranged human resource system. We already have a
support system to retain people, so they don’t have to quit
their jobs even when life events occur. What we need fromnow on is training aimed at promotion. We will have women
employees who are eligible for this in a little more time, so it
will be necessary to consider the respective needs of those
women and the Company. There’s a promising feel to it, so I
think diversity at the Company will get even moreinteresting.
Taira: Sure enough, it will become much easier whenpeople emerge to serve as precedents. Since women’s
empowerment at construction sites has only just begun,
things won’t move forward unless we do something.
Shimizu: The thoughts of the people at the top are extremely
important in these initiatives. In our case, President Taira is
profoundly aware that diversity is a very important topic for
management, and the Diversity Promotion Project launchedthis April is also operating via a team under his directsupervision.
Of course, there are still many aspects of the Company
that are male-based, so honestly speaking, we’re only
halfway along the road in some respects. But the base ofvaluing people regardless of gender or nationality is firm,
and there’s an atmosphere of paying respect to people. I
strongly feel these points are characteristic of the Tokyu
Group culture.
Taira: Perhaps the Company has only just arrived at thestarting line. However, we plan to continue being the most
women-friendly company in the industry. It is my earnest
wish that we will one day see one of our full-time female
employees become our President.

——Thank you for today.

Corporate Report 2022

30

E S G S e c ti o n

I n t ro du c t i o n

About Seikitokyu Kogyo GroupG ro w t h St r a t e g y

Data Section

ESG Se c t i on

GovernanceInternal Control and Risk Management

Corporate Governance
Basic Stance on Corporate GovernanceTo sincerely fulfill our responsibility as “an infrastructure building company that helps create affluent communities (ourcorporate philosophy),” live up to expectations from society, and achieve a sustainable growth of the Company and a mediumto long-term increase in corporate value, we recognize that enhancing corporate governance to ensure the fundamental
fairness, health, and efficiency of management is one of the top priorities in management. We strive to enhance corporate
governance in accordance with the following basic stance.
We ensure substantial equality among shareholders, respect the rights and interests of shareholders and all otherstakeholders, and build harmonious relationships with them.
Directors and Audit & Supervisory Board Members recognize their fiduciary responsibilities and fulfill expected roles andresponsibilities.
We disclose corporate information in an appropriate manner and ensure transparency.
We engage in constructive dialogues with stakeholders.
We have compiled basic matters on corporate governance as Seikitokyu Kogyo Corporate Governance Guidelines, which
can be found on our website.
Web

Seikitokyu Kogyo Corporate Governance Guidelines Web
https://www.seikitokyu.co.jp/assets/file/pdf/sustainability/governance/corporate/20211221_1.pdf (in Japanese)

Organizational Structure for Corporate GovernanceW‌ e recognize that the development of an internal control system is an important management issue to ensure compliance withlaws and regulations and the Articles of Incorporation in Directors’ execution of duties, as well as the appropriateness of operations.
To this end, we have developed a range of rules, manuals, etc. and established and implemented a whistle-blowing system that
ensures anonymity of whistleblowers and protects them from disadvantageous treatment. In addition, we conduct periodic internal
audits to monitor business execution from various perspectives, including legality. The audit results are reported to Directors andAudit & Supervisory Board Members as occasion arises, as well as to the Management Meeting and Board of Directors twice a year.
In April 2007, the Internal Control Department was established in the head office to strengthen and promote internal control.
We constantly work on the review of existing systems and the establishment of systems to ensure the appropriate and efficient
execution of duties and the appropriateness of financial reporting.
Please refer to the following document for the systems to ensure the appropriateness of operations and the status of
implementation of the systems (Fiscal year ended March 31, 2022).
WebInternet Disclosure Matters for Notice of the 73rd Annual General Meeting of Shareholders

Dialogue with Shareholders and Investors‌ e strive to promote constructive dialogues with shareholders and investors to pay attention to management-related analysis, opinions, etc.
Woffered by capital providers, including shareholders, and in turn achieve sustainable growth and medium- to long-term increase in corporate value.
In the process of formulating our Where We Should Be in 2030 strategy and the Medium-term Management Plan (FY2021–
FY2023) announced on May 12, 2021, we took into consideration a lot of feedback received in the dialogues, which is partly
reflected in the final vision and plan.
Dialogue in FY2021

General Meeting of Shareholders
Elect, Dismiss

Elect, Dismiss

Elect, Dismiss

Consult

Audit & Supervisory Board

Board of Directors

Nomination and Compensation
Committee

https://contents.xj-storage.jp/xcontents/AS03190/217552bf/d74f/40b2/ab4e/f2c2a3ec6b1f/140120220527560298.pdf (in Japanese)

Directors

Full-time Audit & Supervisory
Board Member
Outside Audit & Supervisory
Board Member

Audit

Outside Directors

Financial results presentation

IR meeting (individual)

SR meeting (individual)

June, November

426

Collaborate

ReportSubmit topics for discussion, ReportManagement Meeting
Submit topics for discussion, Report

Select, Discharge・Oversee

Representative Director,
President

ReportGive
instructions

ReportInternal control department
ReportCollaborate

Collaborate

Internal audits

Give instructions, Oversee

Executive Officers
Departments for execution of duties

Accounting Auditor

Report, Recommend

Group companies‌ o ensure an effective and appropriate oversight over corporate management by the Board of Directors and enhance its
Tfunctions, we analyze and evaluate the effectiveness of the Board of Directors as a whole every year, by taking into
consideration self-evaluation by each Director and other indicators. An overview of the results is disclosed.
For fiscal 2021, the effectiveness of the Board of Directors as a whole was analyzed and evaluated at the Board of Directors
meeting, based on the evaluation by and opinions of all Directors and Audit & Supervisory Board Members on the compositionof the Board of Directors, its administration, and other factors. The Board of Directors considers that although there is room forfurther improvement in terms of the state of discussions on medium- to long-term management issues including initiatives forproblems surrounding sustainability and of the independence of Outside Audit & Supervisory Board Members, the Board isfunctional enough to ensure effectiveness, with steady improvements in the matters recognized as issues in the previous
evaluations.
The shared awareness of issues is reflected in the management structure after the Annual General Meeting of Shareholders
held on June 23, 2022. Currently, the Audit & Supervisory Board is composed of four members in total, with three members
being Outside Audit & Supervisory Board Members who are highly independent.
External evaluation is also conducted every three to five years (the last evaluation was in fiscal 2018). We will further
enhance the functions of the Board of Directors by constantly analyzing and evaluating the effectiveness of the Board andmaking improvements.

SEIKITOKYU KOGYO CO., LTD.

Officer Compensation
Total Amount of Compensation, Etc. for Directors and Audit & Supervisory Board Members (FY2020)

Audit

Evaluation of the Effectiveness of Board of Directors

31

Officers

Directors

Basic compensation

Stock compensation(basic compensation + variable compensation)(cost incurred based on the restricted stock compensation plan)

181 million yen

21 million yen

Total amount of compensation

No. of eligible
persons

203 million yen

10O f which Outside
Directors

24 million yen

24 million yen

3

Audit & Supervisory
Board Members

44 million yen

44 million yen

4O f which Outside
Audit & Supervisory
Board Members

29 million yen

29 million yen

3

Reference: 1. Basic compensation, variable compensation, and stock compensation accounted for approximately 55%, 30%, and 15% respectively of
the compensation for executive directors.
2. The above amounts include the amount of compensation for one Outside Audit & Supervisory Board Member who left office at theconclusion of the 72st Annual General Meeting of Shareholders held on June 23, 2021.
3. At the 57th Annual General Meeting of Shareholders held on June 29, 2006, it was resolved that the total amount of annual compensation
for Directors and Audit & Supervisory Board Members shall be not more than 324 million yen (excluding employee’s salary for Directors
who also serve as employees) and not more than 60 million yen, respectively.
4. At the 69th Annual General Meeting of Shareholders held on June 22, 2018, it was resolved that a restricted stock compensation plan
shall be introduced for Directors (excluding Outside Directors), that the amount of monetary compensation receivables provided from thetotal amount of compensation for Directors shall be not more than 60 million yen per year, and that the number of common shares issued
or disposed of as restricted stock shall be not more than 50,000 per year.

Corporate Report 2022

32

E S G S e c ti o n

I n t ro du c t i o n

Officers (As of September 30, 2022)

About Seikitokyu Kogyo GroupG ro w t h St r a t e g y

Data Section

ESG Se c t i onCompliance
Initiatives to Enhance Compliance‌ o promote compliance management, we have established the Seikitokyu Kogyo Group Compliance Code of Conduct. WeTstrive to ensure the effectiveness of the Code of Conduct by developing and implementing a whistle-blowing system, etc.,
offering periodic training by the department in charge, and taking other relevant measures.
For enhanced compliance, we constantly took action in fiscal 2021 to raise awareness of officers and employees of theCompany and its subsidiaries, which includes thorough education to that end. We also take thorough measures to prevent therecurrence of the Anti-Monopoly Act violation. The Board of Directors constantly monitors the state of affairs.

Systems to Ensure Compliance

Other than independentand outside

(11)

(10)

(7)

(4)

(8)

(9)

Independentand outside‌ ompliance Promotion OfficerC
Our system to ensure compliance with laws and regulations, etc. includes a department in charge of compliance, whichcentrally handles issues related to the matter, and Compliance Promotion Officers appointed in each department. In fiscal
2021, 88 offices had Compliance Promotion Officers, for whom a dedicated training program was in place.
Compliance Hotline (Whistle-blowing System)
A compliance hotline has been set up in the department in charge of compliance, so that employees, etc. of the Company and
its Group companies can directly seek advice on or report possible violations of laws and regulations, etc. The system
contributes to the prevention, early detection, and correction of such violations. What is discussed or reported, as well as
results of investigations, will be reported to the Management Meeting and the Board of Directors.
Systems to Ensure Compliance with the Anti-Monopoly Act
We have developed internal systems to eliminate any violation of the Anti-Monopoly Act. Specifically, we update the AntiMonopoly Act compliance manual as necessary, take strict disciplinary actions against violations, have set up a hotline
dedicated to Anti-Monopoly Act violations, ensure thorough education and training, carry out appropriate job rotation, andconduct internal audits.

Independent andoutside (female)7
Number of Directors(Number of Outside Directors)
3 Outside Directors

(6)

(5)

(1)

(2)

(3)

5
Number of Nomination and Compensation
Committee members(Number of Outside Directors)

Status of Compliance Training, Etc.

Empowerment of women

Finance/accounting

Human resources/labor affairs

Administrative experience

Legal affairs/compliance

Products

Management experience

Construction

Engineering field

Business administration

Yoshikazu Taira Representative Director, President
Director; Vice President, Executive Officer; Work Style Reform
Tsukasa Furukawa Representative
Project Leader

Managing Executive Officer; General Manager, Business Administration Division; General
Kazushi Ishida Director;
Manager, Corporate Planning Department; Sustainable Management Strategy Project Leader
Director; Managing Executive Officer; Deputy General Manager, Business Promotion
Yuji Ooteki
Division; General Manager, Engineering Department, Business Promotion Division

Shinya Fukuda Director (Outside Director); Certified Public Accountant
Masato Tamura Director (Outside Director)
Rena Shimizu

Director (Outside Director); Representative Director, President, CHANCE for ONE
Co., Ltd.; Director (Outside Director), ATOM Corporation

Masayuki Koide Full-time Audit & Supervisory Board Member
Tsunehisa Otsuki Full-time Audit & Supervisory Board Member (Outside Audit & Supervisory Board Member)
Yoichi Saito
Yukio Ono
Note:

Audit & Supervisory Board Member (Outside Audit & Supervisory Board Member); Lawyer; Audit & Supervisory
Board Member (Outside Audit & Supervisory Board Member), TOKYU CONSTRUCTION CO., LTD.
Audit & Supervisory Board Member (Outside Audit & Supervisory Board Member); Certified
Public Accountant; External Audit & Supervisory Board Member, TIS Inc.

2020

2021

FY

2019

2020

2021

No. of participants (cumulative total)

1,154

619

1,790

No. of offices (cumulative total)

125

107

105

Compliance with the Anti-Monopoly Act‌ etween September 6, 2016 and July 30, 2019, the Japan Fair Trade Commission took multiple measures against ourBviolations of the Anti-Monopoly Act, which had taken place in the period up to January 27, 2015. After recognizing that
violations had taken place, the Group has constantly carried out measures to prevent recurrence, which we laid out with thehelp of external experts. We will remember past mistakes, make sure to implement measures to prevent recurrence, promotecompliance management across the entire Company, and strive to eliminate any illegal activities.
Violations of the Anti-Monopoly Act
The Group is working to the best of its ability on measures to prevent recurrence to thoroughly eliminate violations of the AntiMonopoly Act and recover trust at an early stage.
Chronological Order of the Series of Violations of the Anti-Monopoly Act
Web

SEIKITOKYU KOGYO CO., LTD.

https://www.seikitokyu.co.jp/dev/wp-content/themes/twentysixteen/pdf/company/compliance.pdf (in Japanese)

Measures to Prevent Recurrence
Announced on March 25, 2016 M
 easures to Prevent the Recurrence of Anti-Monopoly Act Violations (Mainly includes measuresagainst violations in bidding for construction works)
Web

Measures to Prevent Recurrence for Compliance with the Anti-Monopoly Act

https://www.seikitokyu.co.jp/wp-content/uploads/2016/03/20160325.pdf (in Japanese) pecific Measures to Prevent Recurrence Compiled in Response to the Recommendations inAnnounced on January 24, 2020 S
the Investigation Report (Additional measures against violations in deciding mixture prices)Web

in the “Nomination and Remuneration Committee” column indicates that the person chairs the committee.

The Company designates the skills (knowledge, experience, and abilities) that our Board of Directors should possess in order to appropriately
demonstrate their decision-making and supervisory functions for the Company’s continuous growth and improvement of medium- to long-term corporate
value. We have formulated a skills matrix summarizing the relevant skills possessed by the Directors and Audit & Supervisory Board Members.
Outside Directors are required not only to have a deep understanding of the Company’s business but also to be equipped with a good overall balanceof skills as members regarding the business departments and business management as a whole. Outside Directors are also required to possess
specialization, abundant experience, and wide-ranging knowledge to leverage in giving useful advice covering supervision of business execution andmanagement overall. Skills and background considered particularly important at the present time are as specified in the table above.
We will reexamine the necessary skills for the Board of Directors and Audit & Supervisory Board as needed, in accordance with changes in thebusiness environment, medium- to long-term management trends, and revisions to our business strategy.

33

2019

Areas where officers have particular expertise and experience
Non-engineering field

Positions, responsibilities, and significant concurrent positions

Independent Officer

Name

Nomination and Compensation Committee

3 Outside Directors

Status of Internal Audits

FY

Specific Measures to Prevent Recurrence Compiled in Response to the Recommendations in the Investigation Reporthttps://www.seikitokyu.co.jp/dev/wp-content/uploads/2020/01/20200124.pdf (in Japanese)

Progress of the Measures to Prevent Recurrence
The Group monitors the status of implementation of the measures to prevent recurrence and makes periodic reports to the Boardof Directors and the Management Meeting.
In addition, an overview of the monitoring results is disclosed on our website to help regain trust from stakeholders.
Web

https://www.seikitokyu.co.jp/company/compliance (in Japanese)

Corporate Report 2022

34

D a ta S e c ti o n

I n t ro du c t i o n

About Seikitokyu Kogyo GroupG ro w t h St r a t e g y

E S G Se c t i o n

Data Section

Financial Information

Consolidated Balance Sheets for the Years Ended March 31 (Millions of Yen)
72nd fiscal year 73rd fiscal year
2021

2021

53,821

Trade receivables
Cost on uncompleted
construction contracts
Raw materials and supplies
Other current assets
Non-current assets

14,035
34,150
2,565
386
2,683
25,58812,81434,942
459
401
2,871
26,806

Short-term loans payable

23,655
9,220

9,824

Machinery, equipment, vehicles,
tools, furniture and fixtures

20,681

21,511

Land

14,327

14,217

Construction in progress
Accumulated depreciation
Intangible assets
Other intangible assets

245(21,464)

263

250

263

250

1,669

1,703

Investment securities

288

290

Deferred tax assets

847

947

Total assets

35

SEIKITOKYU KOGYO CO., LTD.

533
79,409Gross profit

14,111

10,231

7

107

Selling, general andadministrative expenses

5,640

5,812

Operating income

8,470

4,418

108

77

1,921

Provision for warranties forcompleted construction

15

32

Provision for loss on
construction contracts

75Provision for bonuses

1,645

1,861

4,216

4,163

7,742

8,490

Long-term loans payable

5,000

6,900

Net defined benefit liability

2,597

1,505

Other long-term liabilities

144

84

38,61937,797464
78,295

Other income
Other expenses

183

137

Ordinary profit

8,395

4,358

Extraordinary income

94

98

activities

Cash flows from investing
activities

Cash flows from financing

Extraordinary losses

1,389

128

Profit before income taxes

7,100

4,327

Income taxes - current

1,332

1,123

Income taxes - deferred

586

(100)

5,180

3,304

Shareholders’ equity

41,24640,266

Net profit attributable toowners of parent

Share capital

2,000

2,000

Capital surplus

519

521

38,76740,248(40)(2,502)

(455)

231

Unrealized gain (loss) on
investment securities

21

22

Foreign currencytranslation adjustment

(15)

4

Remeasurements ofdefined benefit plans

(461)

203

Total net assets

40,79040,497

Total liabilities and net assets

79,40978,295cash and cash equivalents

Cash and cash equivalents
at beginning of year

Cash and cash equivalents
5,180

3,304

1,138

4,646

(3,622)(3,668)2,343(2,232)

6

33

(133)

(1,220)14,16914,035

14,035

12,814equivalents

Net increase (decrease) in

Net income2022

Effect of exchange ratechange on cash and cash

Net profit attributable tonon-controlling interests

Accumulated othercomprehensive income

Cash flows from operating

activities

Net assets

Treasury stock

Other investments andother assets

20,7222,070

Retained earnings

Investments and other assets

85,132

21,767

Advances received on uncompleted
construction contracts763(20,820)90,02574,901

494

Total liabilities

Net sales

75,91424,852

Buildings and structures

2021

Cost of sales

1,147

Other current liabilities

2022

29,307

Income taxes payableNon-current liabilities
Property, plant and equipment

72nd fiscal year 73rd fiscal year2021

30,87751,489Total trade payables

Cash and deposits

72nd fiscal year 73rd fiscal year2022

Liabilities and net assets
Current liabilities

Current assets

Consolidated Statements of Cash Flows for the Years Ended March 31 (Millions of Yen)

72nd fiscal year 73rd fiscal year

2022

AssetsConsolidated Statements of Income for the Years Ended March 31 (Millions of Yen)

at end of year

Consolidated Statements of Comprehensive Income for the Years Ended March 31 (Millions of Yen)
72nd fiscal year 73rd fiscal year2021

Net income
Other comprehensive income(loss)
Comprehensive income

2022

5,180

3,304

830

687

6,010

3,992

Corporate Report 2022

36

D a ta S e c ti o n

I n t ro du c t i o n

ESG Data

G ro w t h St r a t e g y

E S G Se c t i o n

Data Section

Company Profile and Stock Information (as of March 31, 2022)

Environmental Data

Greenhouse gas

About Seikitokyu Kogyo Group

Scope

Unit

emissions by the reporting company (the use
Scope 1 Directof fuel and industrial processes)

Consolidated

Thousand tonsof CO250

47

Scope 2 Indirect emissions from the use of electricity, heat,and steam provided by other companies

Consolidated

Thousand tonsof CO21211

FY2020 FY2021

Indirect emissions not included in Scope 1 or 2
tons
Scope 3 (emissions of other companies related to the activities Consolidated Thousandof CO2of the reporting company)

356

306

Unit

FY2018FY2019FY2020

FY2021

Consolidated

Persons

Persons

907
846
766
80

1,031
841
755
86

1,043
869
773
96

1,098
931
812
119

Unit

FY2018FY2019FY2020

FY2021

%

9.5
0.6
27.1

10.2
0.6
27.6

11.0
1.4
30.0

12.8
1.6
31.3

14.7
2.7
34.7

29.6
−
46.3

21.3
8.8
55.0

23.5
4.1
43.9

0.9
−
12.6

0.9
−
11.4

0.9
−
11.5

0.8
−
12.8

Scope
Unit
Childcare leave
Persons
No. of employees who took childcare leave
SEIKITOKYU KOGYO CO., LTD.
%
Rate of taking childcare leave

FY2018FY2019FY2020

FY2021

7
24.1

4
14.8

4
13.3

11
34.4

Annual paid leave
No. of days of paid leave taken (average)

Persons
SEIKITOKYU KOGYO CO., LTD. Persons

Scope

SEIKITOKYU KOGYO CO., LTD.

%%%

SEIKITOKYU KOGYO CO., LTD.

%%%

SEIKITOKYU KOGYO CO., LTD.

%
%

Scope

Unit

FY2018FY2019FY2020

FY2021

SEIKITOKYU KOGYO CO., LTD.

Days

5.2

7.4

12.0

11.3

Scope
Employment of persons with disabilities
Employment rate of persons with disabilities SEIKITOKYU KOGYO CO., LTD.

Unit

FY2018FY2019FY2020

FY2021

%

2.07

1.96

1.78

2.86

Safety and healthFrequency rate of occupational accidents
Construction departments
Products departments

Scope

Unit

FY2018FY2019FY2020

FY2021

SEIKITOKYU KOGYO CO., LTD.

−
−

1.65
−

0.97
2.80

0.65
−

0.47
−

Governance Data
Composition of the Board of Directors
Total no. of Directors
No. of Outside Directors

SEIKITOKYU KOGYO CO., LTD.

Total number of shares authorized

Established

January 16, 1950

Total number of shares issued

Head office location 2-9-3, Shibakoen, Minato-ku, Tokyo, Japan

Scope

FY2018FY2019FY2020

FY2021

7
3

8
2

9
3

9
3

Scope
Unit
Status of holding of Board of Directors meetings
Times
No. of meetings held
SEIKITOKYU KOGYO CO., LTD.
%
Rate of attendance of Outside Directors

FY2018FY2019FY2020

FY2021

14
100.0

14
100.0

14
100.0

14
100.0

Scope
Unit
Status of holding of Audit & Supervisory Board meetings
Times
No. of meetings held
SEIKITOKYU KOGYO CO., LTD.
%
Rate of attendance of Outside Audit & Supervisory Board Members

FY2018FY2019FY2020

FY2021

5
100.0

5
100.0

13
100.0

9
100.0

Scope
Unit
Compliance
Persons
No. of compliance training participants (cumulative total)
SEIKITOKYU KOGYO CO., LTD.
Offices
Status of internal audits

FY2018FY2019FY2020

FY2021

1,068
107

1,154
125

619
107

1,790
105

SEIKITOKYU KOGYO CO., LTD.

Unit
Persons
Persons

40,414,407 shares
7,569

Number of shareholders

Major Shareholders

Number of employees 931

Sites
Branches

150,000,000 shares

2.0 billion yen

Note: T he head office relocated on September 20, 2022.
The address recorded above is the head office’s address after
relocation.
Scope

Diversity
Composition of employees
Percentage of women
Percentage of foreign nationals
Percentage of mid-career employees
Recruitment status
Percentage of women
Percentage of foreign nationals
Percentage of mid-career employees
Status of managers
Percentage of women
Percentage of foreign nationals
Percentage of mid-career employees

Corporate nameShare capitalSocial Data
No. of employees
No. of employees
No. of employees
MaleFemaleStock Information

Company Profile

Hokkaido Branch (Hokkaido)
Tohoku Branch (Miyagi)
Hokuriku Branch (Niigata)
Kanto Branch (Tokyo)
North Kanto Branch (Saitama)
East Kanto Branch (Chiba)
Tokyo Branch (Tokyo)
Yokohama Branch (Kanagawa)
Kanto Product Sales & Marketing Branch Office (Tokyo)
Nagoya Branch (Aichi)
Kansai Branch (Osaka)
Chugoku Shikoku Branch (Hiroshima)
Kyushu Branch (Fukuoka)

Business offices and others 53 sites
Technology research laboratory Tochigi

Material plants
and others

49 sites

Training center

Tochigi

Hokuriku Branch
Nagoya Branch
Kansai Branch

Chugoku Shikoku
BranchKyushu BranchGroup Companies

TOKYU CONSTRUCTION CO., LTD.

8,931

23.87

The Master Trust Bank of Japan, Ltd. (trust
account)

3,883

10.38

INTERTRUST TRUSTEES (CAYMAN)
LIMITED SOLEL Y IN ITS CAPACITY AS
TRUSTEE OF JAPAN-UP

3,112

8.32

Hikari Tsushin K.K.

2,888

7.72

TOKYU CORPORATION

1,533

4.10

Custody Bank of Japan, Ltd. (trust account)

1,044

2.79

Seikitokyu Employees’ Shareholding
Association

879

2.35

BBH FOR FIDELITY PURITAN TR: FIDELITYSR INTRINSIC OPPORTUNITIES FUND

600

1.60

STATE STREET BANK AND TRUST CLIENTOMNIBUS ACCOUNT OM02 505002

535

1.43

BNP PARIBAS SECURITIES SERVICESLUXEMBOURG/JASDEC SECURITIES/UCITS ASSETS

468

1.25

Note: The shareholding ratio was calculated after deducting 2,996,909
shares of treasury stock.

Testing laboratories 8 sites
Equipment center Tochigi

Number of shares held Shareholding ratio(Thousand of shares)(%)

Names of shareholders

Hokkaido
BranchDistribution of Shares by Types of Ownership

Tohoku Branch

Individuals and others19.03%
Foreign investors21.07%

North Kanto Branch

Total

40,414,407 shares

Kanto
Product Sales& Marketing
Branch Office

Other domestic corporations36.55%
Securities companies1.60%
Treasury stock7.42%

Kanto BranchTokyo Branch
East Kanto Branch

Financial institutions14.34%

Note: 2,000,000 shares of treasury stock were canceled on June 30,
2022.

Yokohama Branch

Subsidiaries HODOU KOGYO CO., LTD.
HOEI KENSETSU KOGYO CO., LTD.
MICHINOKU KOGYO CO., LTD.
YAMABIKO KOGYO CO., LTD.
CHUGAI ENGINEERING CO., LTD.
ST SERVICE CO., LTD.
NITTOU ROAD CO., LTD.
TAKAMATSU KOUMUTEN CO., LTD.

SHINSEIKI KOGYO CO., LTD.
KUMAREKI KOGYO CO., LTD.
SEIKITOKYU MYANMAR ROAD COMPANY LIMITEDSTK PACIFIC CORPORATION
Affiliates

GULF-SEAL KOGYO CORPORATIONNOTO ASCON CORPORATION

Note: Effective July 1, 2021, all shares of ST KENZAI CORPORATION were transferred outside the Group.

37

SEIKITOKYU KOGYO CO., LTD.

Corporate Report 2022

38

ST and K(Seikitokyu Kogyo’s mascot characters)
ST and K, our mascot characters, were bornin January 2020 on the occasion of our 70th

SEIKITOKYU KOGYO CO., LTD.
2-9-3, Shibakoen, Minato-ku, Tokyo, 105-8509, Japan
Inquiries: https://www.seikitokyu.co.jp/en/
Issued in December 2022

anniversary. They will help promote safety atconstruction sites and asphalt plants acrossthe country, improve the industry’s image,and conduct public relations activities.