METAWATER REPORT 2018
The Fiscal Year Ended March 2018

Corporate mission

We continue to be sincere in what we do.
We work on problems earnestly andstrive to provide solutions.

Continue,to make it sustainable.

We continue to collaborate with our partners.
We respect our partners and work to achieve withdiverse knowledges, technologies and cultures.
We continue to innovate for the future.
We experiment in new ideas and take challenges.
To make sustainable what is truly important.

Contents

1

Glossary

1

Corporate mission

21

Topics: Exhibition at the STI Forum

35

SocialEPC

Design and construction of facilities and equipment

3

The 10-year history of METAWATER

22

Special feature 1:

45

Governance

O&M

Operation and maintenance of facilities and equipment

5

Statistics of METAWATER

PPP business expansion: Responding to54

Financial Information

7

Highlights of major consolidated financial results

expanded business needs

95

Disclosure Policy

PPP	A concept referring to an approach allowing the private sector to participate in projects related to public services offering in a wider sense.
Improvement of efficiency and quality of services are sought by making positive use of private funds, technologies, know-how and management skills.

9

Top management’s message

23

Special feature 2:

96

Corporate Information

13

For the sustainable growth of corporate value

	METAWATER’s PFI business and contribution

15

METAWATER business developments

to SDGs

PFI	An approach to use the private sector positively in design/construction, operation/maintenance and management of public infrastructures,etc. as well as the funding necessary for these activities.

17

Messages from manager

25

METAWATER Group’s ESG

PFI Actfrom each business section

27

Environment

Concession	An approach to grant long-term business licenses of the public infrastructure business to a private company without transferring ownership of the facility.

METAWATER REPORT 2018

DB

An approach to use the private sector positively in design and construction of public infrastructures, etc.

DBO

An approach to use the private sector positively in design/construction, operation/maintenance, and management of public infrastructures, etc.

An act related to the promotion of public facility improvement, etc. by making positive use of funding from the private sector and so forth.

METAWATER REPORT 2018

2

The 10-year history of METAWATER

2009

2010

2011

2012

2013

2014

● Net sales exceeded JPY

2015

2017〜

2016

● Listed on the First Section of

100.0 billion

the Tokyo Stock Exchange●The number of employees

exceeded 2,000

Apr.

Establishment of
METAWATER GroupApr.

Launched the reconstruction of
Kawai Purification Plant,
Japan’s first PFI project
covering the renewal of theentire purification plant and its
operation and management(Kawai Purification Plant
located in Yokohama)

Apr.

METAWATER Co., Ltd. and
METAWATER SERVICE Co.,
Ltd. were establishedEstablished the Europe
Representative Office inGermany (relocated to theNetherlands in 2014)

Jul.

Jul.

Acquired the environment
business of Kurimoto
Technos aimed atstrengthening andexpanding the resourceand environment businessAs a result of integration of
mechanical and electric
technologies, the water reusesystem combining ceramic
membrane and ozone
treatment (Shibaura Water
Reclamation Center, Tokyo) andmulti-layer fluidized incinerator
contributing to reducing
greenhouse gas emissions(south sludge plant in Tokyo)
commenced operations

Apr.

Launched a new businesscalled Water Business Cloud(WBC) to support the water
and wastewater businessMay

An energy management
system using intensive
solid-liquid separation
technology jointly proposedwith the Japan Sewage
Works Agency was selected
for the FY2011 B-DASH*1

Apr.

Aug.

METAWATER USA, INC. wasestablished in the UnitedStates as the METAWATER
Group’s first overseas
subsidiary

Apr.

Relocated the Head Officefrom Toranomon, Minato-ku,
Tokyo to Kanda-sudacho,
Chiyoda-ku, Tokyo

Introduced MBR*2 equipment
to Ofunato, Iwate, as part ofefforts to support
reconstruction after the Great
East Japan Earthquake

Established a representative
office in Hanoi, Vietnam

Mar.

The “Non-aeration Recycled
Water Treatment Technology”
jointly proposed with Kochi
City, Kochi University, and theJapan Sewage Works Agency
was selected for the FY2014
B-DASH

Apr.

HyBrid Chemical Co., Ltd. in
the chemical business wasestablished based on joint
investment between asubsidiary of the Tsukishima
Kikai Group and METAWATERSERVICE Co., Ltd.
Launched the effluent treatment
facility reconstruction project forthe seafood processing complex
in Onagawa-cho, the first
financially-independent-type PFI
project in plant management inJapan (Onagawa-cho, Miyagi)

Established a representative
office in Phnom Penh,
Cambodia
May

Dec.
Oct.

Jan.

The Aichi Kinuura East
Purification Center
commenced operation as thefirst facilities for productionof fuel from sewage sludge
in the Chubu Region

Installed small ceramic
membrane water
purification equipment in
Ishinomaki, Miyagi, tosupport emergency water
generation

The world’s first wastewatersludge gasification furnace(the Kiyose Water
Reclamation Center in Tokyo)
commenced operations

The Omuta and Arao Joint
Water Treatment Plant(Ariake Water Treatment
Plant) commenced operation
as the DBO project for
renewal of water treatment
plant by two adjacentmunicipal authorities acrossa prefectural border

Delivered first mobile
ceramic membrane water
purification equipment toAfrican countries (Republicof Malawi, Republic of
Kenya, Republic of Togo)

The innovative sewage
sludge energy conversion
system with optimized
dehydration, combustionand power generation jointly
proposed with Ikeda City,
Osaka, was selected for the
FY2013 B-DASH

Aug.

*1 B-DASH is the abbreviation for Breakthrough by Dynamic Approach in Sewage High Technology Project. This is a demonstration project carried out by the Ministry of Land,
Infrastructure, Transport and Tourism to help reduce sewage business costs and create renewable energy, etc. by accelerating the research, development and practicalapplication of new technologies, and to support overseas water business development by Japanese companies*2 MBR: Membrane separation active sludge method*3 RO scheme: RO stands for Rehabilitate Operate. It is a scheme to upgrade and repair the facilities and then engage in operation and management*4 Emori Co., Ltd.: Currently, EMORI Infotech Co., Ltd.
*5 Arao Water Service is a special purpose company engaging in business through comprehensive consignment of water and other businesses in Arao, Kumamoto*6 Kitakyushu Water Service, Co., Ltd. is a third sector entity engaging in operation monitoring and centralized control of municipal water and wastewater facilities in
Kitakyushu City

3

METAWATER REPORT 2018

Undertook capital increaseof System IO Co., asubsidiary of Nihon Suido
Consultants Co., Ltd.
Formed capital and businessalliance by undertaking
third-party allocation ofshares of Rood Wit Blauw
Holding B.V. in the
Netherlands

The water treatment plant
Andijk III in the Netherlands
using ceramic membrane
filtration system CeraMac®
provided by PWNT B.V.
commenced operation

Sep.

Established METAWATER TECH
Co., Ltd. engaging in maintenanceand management of water andwastewater facilities

Dec.

Launched the “Development andOperation of Sludge Treatment
Facilities for Toyokawa Water
Purification Center,” the first
sewage project in Japan using
the RO scheme*3

Ozone generating systemcommenced operation at the
Wylie Water Treatment Plant in
Texas, one of the world’s
largest water treatment plants

Feb.

Concluded a contract on the“Water Source eco-project”(W-eco’p) with Yokohama
Waterworks Bureau

Mar.

“Demonstration Project:
Stormwater Management
Technology for Local Heavy
Rainfall in Urban Areas” jointly
proposed with Shinnihon
Consultants, Furuno ElectricCo., Ltd., Emori Co., Ltd.*4,
Nihon Suido Consultants Co.,
Ltd., Kobe University, Fukui City,and Toyama City was selected
for the FY2015 B-DASH

Launched the “Takizawa Water
Purification Plant Renovation
Project” (Aizuwakamatsu,
Fukushima), a water facilities
renovation project covering
water intake to faucets
May

Jun.

Jan.

Apr.

Converted a U.S.
water-treatment
engineering company,
Aqua-Aerobic Systems, Inc.,and its subsidiary into
wholly-owned subsidiaries

Mar.

Concluded an agreement fora naming rights partner for
the Aichi Sewerage Science
MuseumApr.

Commenced operation ofceramic membrane filtrationwater treatment plant in the
United States (Basin Creek
Water Treatment Plant in
Montana), the first delivery
for the METAWATER Group

Arao Water Service*5
represented by METAWATER
commenced business basedon an agreement forcomprehensive consignmentof Arao City water businesswith Arao, Kumamoto“Technology Demonstration
Project for Final Sedimentation
Tank Treatment Capability
Enhancement” jointly proposedwith the Japan Sewage Works
Agency and Matsumoto City
was selected for the FY2017
B-DASH

Kitakyushu Water Service, Co.,
Ltd.*6 invested by Kitakyushu
City, METAWATER, and others
commenced business

Dec.

Oct.

Concluded first businessagreement for development
and operation of recycling
center (Gotemba Oyama
Kouiki Gyousei Kumiai
Recycling Center) under the
PFI scheme

Business alliance and collaboration● NIHON GENRYO Co., Ltd.
● Suido Kiko Kaisha, Ltd.
● Kokusai Kogyo Co., Ltd.
● PWNT B.V. (the Netherlands)

Jan.

●HORIBA, Ltd.
●NTT DATA Corporation●Nagaoka International Corporation

Management and Operations Overview

2008

Received order for the comprehensive
management business with facilities
improvement of the Ofunato
Purification Center, which
comprehensively outsources facilities
improvement, maintenance, andmanagement to the private sector

2018
Mar.

Apr.

Formed capital and businessalliance by accepting newshares of SkySeeker Co., Ltd.
through a third-party allotment

Drone

METAWATER Group
10th anniversary

METAWATER REPORT 20184

Statistics of METAWATER

Consolidated sales (March 2018)delivers total solutions
Consolidated number of employees

Average age(as of end of March 2018)(as of end of March 2018)

2,961

employees

Service solution
business

45.9
billion yen

110.9

Plant engineeringbusiness

65
billion yen

billion yen

Service solution
business

4.1
billion yen

6.7

Plant engineeringbusiness

2.6
billion yen

billion yen

Consolidated free cash flow

(March 2018)(March 2018)55

billion yen

5

METAWATER REPORT 20184.3

billion yen*Unconsolidated basis

Ratio of returning to work after child-care leave(as of end of March 2018)(as of end of March 2018)

50

100

%

%
*Unconsolidated basis*Unconsolidated basis

No. of disabled employees

No. of social contribution activities participated(as of end of March 2018)(Total from FY2013 through FY2017)

employees

260

events*Unconsolidated basis

Amount treated with ceramic membrane filtering system

Amount treated with sludge incineration equipment(as of end of March 2018)(as of end of March 2018)805,518m3*Daily amount treated at 160 domestic projects

8,327

t

*Daily amount treated at 68 systems

No. of prefectures where WBC* has been delivered

No. of monitoring and control systems delivered(as of end of March 2018)(as of end of March 2018)41

prefectures*I nformation and telecommunication technologies for sharing informationin real-time and analyzing and using data gathered

Consolidated net assets

years old

Ratio of taking paid vacation days

41

Operating profit (March 2018)

39.7

No. of facilities whose operation/maintenance areconsigned to us(as of end of March 2018)

101

facilities

Management and Operations Overview

Reinforcing the business base as a corporation that294

systems

No. of Public-Private Partnership (PPP)
projects consigned(as of end of March 2018)30

projects
among

Water and sewage
business fields

in total/ 62 projects*based on the Company’s data

METAWATER REPORT 20186

Highlights of major consolidated financial results■ Results for FY March 2018
Sales

110.9
6.7

billion yen

Operating profit

Exceeded 100 billion yen.
Started reporting consolidated
financial statements
Sales (left axis)

932

931

861

110.0 %

billion yen

Percentage versus
previous year

billion yen

106.6%

1,316

1,172

1,070
1,055

Operating profit (left axis)

900

131.6

Percentage versus
previous year

(Dec. 2014)

1,123

Orders received (right axis)

Orders received

99.3%

Listing on the First
Section of TSE(hundred million yen)

1,200

Percentage versus
previous year

1,069

1,196
1,117

1,125
1,031

(hundred million yen)

120

1,109

Management and Operations Overview

Developing a base for medium- andlong-term growth

928
90

82

81

67

63

600

60

54
300

30

0

0

March.2009

March.2010

March.2011

March.2012

March.2013

March.2014

March.2015

March.2016

During the fiscal year ended March 2018, although net sales declined slightly
due mainly to an increasing number of projects with long-delivery times,

Current profit attributable to owners of parent

3.9

82.9%

Current profit attributable to owners of parent(hundred million yen)70

including PPP projects, and the delayed timing for recording sales of some60

projects, operating profit increased, which is attributed to an improved gross50

profit margin ratio mainly resulting from cost reductions.

Percentage versus
previous year

billion yen

4.2

4.0

3.5
50
2.7

42

47

The amount of orders received marked a record high, and the development of a20

business base aimed at mid- and long-term growth made progress.

100151.65yen

Percentage versus
previous year

82.9%

28

5
4

250

2

’16/ 3’17/ 3’18/ 3123 101.7
yen
105.3
55 billion%

41.7
182.95200

151.65150

107.17

800

100

0

1,200

400

’14/ 3’15/ 3’16/ 3’17/ 3’18/ 30%Percentage versus
previous year

1,600

214.9150’15/ 3

Net assets

Percentage versus
previous year

billionyen

Net assets(hundred million yen)
2,000

276.711
0’14/ 3

Total assets

Total assets
(Yen)
300

3

39

40
30

Current earning per share

Current profit margin
（%）

4.7

March.2018

Company providing
total solutions

General engineering company

Summary of operating results forthe fiscal year ended March 31, 2018

March.2017

39.8

43.1

44.6

523

200

478

482

’14/ 3’15/ 3’16/ 3

2,118.02

yen

Percentage versus
previous year

105.3%’17/ 3

(Yen)

（%）
50

2,500

40

2,000

30

1,500 1,329.76

20

1,000

10

500

0

0

1,230

1,143

872

Book Value per share

Capital adequacy ratios

1,209 1,210
22.9

Supporter ofbusiness operations

550’18/ 3

2,118.02
2,011.42
1,853.68
1,839.04’14/ 3’15/ 3’16/ 3’17/ 3’18/ 3Declined mainly due to foreign exchange

Declined year on year, due to a decrease in

Net assets increased 2.7 billion yen year on year

Net assets per share also increased steadily

losses caused by the strong yen, and a lack of

current profit attributable to owners of parent.

and capital adequacy ratio rose 1.5 percentage

due to a rise in net assets.

tax effects from the US subsidiary unlike thepoints to 44.6 percent, due mainly to booking

previous fiscal year.

current profit attributable to owners of parent.
*As of October 1, 2014, a stock split was enforced to create 100 stocks per common stock. The above values were based on the assumption that the said stock split was conducted at the beginning of fiscal term ended in March 2013.

7

METAWATER REPORT 2018

METAWATER REPORT 20188

Top management's message

Management and Operations Overview

Start of Mid-Term Management Plan 2020

METAWATER will continue its business and activities
for preserving the environment and contributing tolocal communities in cooperation with citizens, local
governments and business partners, in order to sustain
water and environmental infrastructure.

Yasushi Nakamura
President and Representative Director METAWATER, Co., Ltd.
Before his current post, he experienced a series of management positions of the Plant Engineering Business andthe Service Solution Business, and Executive General Manager of the Corporate Strategy Planning Divisions. He
has been engaged in the development of the Water Business Cloud (WBC) as a key person. He is well versed inbusiness execution in wide range of fields supported by his affluent experience.
He was designated as the President and Representative Director in June 2016.

We aim to grow from a general engineering company to a corporationthat supports operations in water and environmental business fields.

9

Design concept of the 10th anniversary logo

In April 2008, the METAWATER Group was founded

A number of water supply and sewage infrastructures

aim is being developed. Taking the opportunity of the 10th

as the first general engineering company in the waterin Japan were developed during the period of highanniversary to reflect on the past 10-year corporate history,

and environmental field in Japan, and marked its 10th

economic growth, and aging facilities and equipment have

the Group has clarified its corporate vision. Specifically,anniversary in April this year. I would like to express mydeteriorated. In addition, considering serious disasters such

the Group aims to continue to contribute to sustaining

sincere gratitude for your continued support.

as the Great East Japan Earthquake and the increasingwater and environmental infrastructures using its strengths

Looking back on the past 10 years, as a corporation operating

occurrence of local heavy rainfalls in recent years, it isin cooperation with business entities including local

businesses in the water and environmental infrastructure

critical to have countermeasures for disasters. In reality,

governments, local companies, and business partners and,field, an area serving as a lifeline for people and industry,

however, business entities engaged in planning and

as a long-term vision, to achieve the sustainable growth of

the Group has been engaged in businesses in the areas ofoperating water supply and sewage works have problems

the Group itself along with society. The Group will continue

water supply, sewage works, and resource environment at

including declining revenue and a shortage of engineers due

to work diligently to become a company that supports

home and abroad, through a combination of mechanical andto a shrinking population.

operations in the water and environmental field, with theelectric technologies, ICT, and maintenance know-how. It

To resolve these issues, business operations with more

aim of achieving water and environmental infrastructures

has contributed to society through these business activities,

comprehensive scope to serve wider areas through publicthat only Japan can implement based on experience of thewhile working on CSR with initiatives for preserving theand private partnerships (PPP) need to be put in place asGreat East Japan Earthquake. We would appreciate yourenvironment and contributing to local communities.

soon as possible, and a legal framework to achieve thisfurther support.

METAWATER REPORT 2018

The logo expresses how water and resource recycling, which
METAWATER Group has supported for the past 10 years since
its foundation, has served to make a more affluent Earth where
people can live.
The design composed of multiple dots represents a form thatcombines the knowledge of each employee and technologies. In
addition, it describes the image of how the infrastructure businessin the future will be supported by not only the METAWATER
Group’s operations, but also collaborations with business partners,
local governments, and local companies.
Clear colors in blue and green represent a clean and wide spacewith active and lively communication.

METAWATER REPORT 201810

Top management's message

In May 2015, the Group formulated the mid-term management plan

to conventional development investments.

Mid-Term Management Plan 2020

(hereinafter the “former Mid-Term Management Plan”) covering

As a business strategy, the Group will obtain renewal demand andEstablishing business structure to achieve a long-term vision

the period through to the fiscal year ended March 2018, and has

strengthen the domestic EPC business, while working to stabilize

worked on expanding growth business areas by reinforcing its core

the domestic O&M business, which is operated with recurringbusiness sectors.

revenue. In addition, the Group will strive to reinforce and expand

As a result, although the Group unfortunately failed to achieve its

growth areas of the domestic PPP business and overseas businessnumerical goals, it maintained favorable orders received, marking

through the regional strategy based on its proven achievements,

the largest ever amount of orders received in the consolidated

as well as the partnership strategy.

financial results for the fiscal year ended March 2018. Consequently,

As the first company engaged in operating water andthe development of a business base to achieve mid- and long-term

environmental infrastructures listed under the industrial

growth has made progress.

classification of electric power and gas on the Tokyo Stock

Given the tasks and accomplishments of the former Mid-Term

Exchange, the Group has contributed to society and theManagement Plan, the Mid-Term Management Plan 2020, which

environment through its business activities. As a further step, it

was formulated in April 2018, is positioned as the first stage towill work on initiatives for reducing environmental burdens andstrengthen the business structure aimed at achieving the long-contributing to local communities more proactively as a corporate

term business vision.

citizen from an ESG viewpoint, devoting itself to the Sustainable

The operating performance of the entire Group is forecast to

Development Goals (SDGs) advocated by the United Nations.

improve from the fiscal year ending March 2019, because projects

Regarding the corporate governance structure, the Group has

already ordered with long-delivery times will start bringing inincreased the number of Outside Directors and Independent

revenue with an increasing number of more profitable projects to

Directors through a resolution passed by the ordinary general

be completed.

meeting of shareholders in 2017, strengthening the structure of the

In the outlook for the next 10 years, we anticipate major changes

Board of Directors. Moving forward, the Group will step up further

in the business environment, including a further increase in themeasures for streamlining and strengthening the management

number of projects with comprehensive operations, as well as the

structure, while enhancing compliance, reinforcing internal control

emergence of projects serving wider areas, as seen in Concession,functions, and having more proactive communications withetc. In a bid to anticipate changes and strengthen the businessstakeholders in compliance with the disclosure policy, in order tostructure, the Group decided to make strategic development

establish trustworthy and transparent management.

investments in the Mid-Term Management Plan 2020, in addition

Key measures
1

Expansion of strategic development investments

Enhancing product development, solution development, and new business development,
which is imperative to achieve mid- and long-term growth.
Promoting management structure based on economies of scale to enable more comprehensive and wider-area business operations
Reducing construction costs by adopting leading-edge technologies including AI and ICT, streamlining maintenance, and improving safety● Developing topline products and new businesses● Creating added value through work-style reforms●●

2

Sales (Actual)

Operating profit (Target)

Operating profit

1st:
2nd:
Strengthening the business structure Business expansion(hundred million yen)

Sales (Target)

Operating profit (Actual)(hundred million yen)

2,000

Former Mid-Term
Management Plan

1,500

200

Mid-Term
Management Plan 2020

Plant engineering business

Service solution businessCore area

Reinforcement ofdomestic EPC business

Reinforcement ofdomestic O&M business

Growth area

Reinforcement and expansion ofoverseas business basis

Expansion ofdomestic PPP business

3

1,000

100

500

0

11

50

‘09/3

‘10/3

METAWATER REPORT 2018

‘11/3

‘12/3

‘13/3

‘14/3

‘15/3

‘16/3

‘17/3

‘18/3

‘19/3

‘20/3

‘21/3

‘28/3

Engaging in continued ESG initiatives

Promoting activities that contribute to the environment and local communities andstrengthening corporate governance more proactively
Making more efforts to reduce environmental burdens andcontribute to the environment through business activities● Expanding environmental education and activities that
contribute to local communities●

Working on BCM and improving the effectiveness of BCP
Further streamlining and strengthening the management structure● Promoting proactive communications with stakeholders●●

Goals of Mid-Term Management Plan
(Consolidated)

FY March2018 Actual

FY March
2021 Target

Increase/decrease(Consolidated)

FY March2018 Actual

FY March
2021 Target

Orders received

131.6 billionyen

140 billionyen+8.4 billion
yen

ROE

7.3%

10.0% or more

Sales

110.9 billionyen

128 billion
yen+17.1 billion
yen

Operating profit

6.7 billion
yen

9 billionyen+2.3 billion
yen

Current net profit

3.9 billionyen

6.2 billionyen+2.3 billion
yen150
Approximately
a two-fold increase
from figures recordedat the foundation

Strengthening and expanding business

Promoting efforts to strengthen core areas and expand growth areas■ Positioning of the Mid-Term Management Plan 2020
Sales

Management and Operations Overview

The METAWATER Group will focus on improving operating performanceand reinforcing its business structure to achieve its long-term vision.

*The goal for FY March 2021 does not take into account the effects of M&A events.

0

METAWATER REPORT 201812

For the sustainable growth of corporate value

Issues involved with our business
Domestic issues

Insufficient financial resources and engineers to prepare countermeasures for aging● ‌Longer delivery times due to larger scale of projects

facilities and disasters

● ‌

● ‌

Developments using new private sector (Concession)

environmental infrastructure field,
Value we offer

Our vision

Positioned as a corporation that isalways trusted by stakeholders

Becoming a corporation that grows continuously
along with local communities and society

Delayed public works and construction projects due to a shortage of human resources● ‌Overseas issues●

Management and Operations Overview

The METAWATER Group supports the water andaiming to improve its corporate value.

The METAWATER Group set forth a long-term vision, which is to continue to[North America]: Aging of facilities, securing water resources, tightening environmental rules, and‌

contribute to sustaining water and environmental infrastructures by leveraging

expanding investments in infrastructure

its strengths in cooperation with business entities including local governments,●[Europe]: ‌Aging of facilities, developments in consigning projects to private sector (Concession, etc.)●[Others]: ‌Improvement in penetration rate of water and sewage facilities, emergence of Chinese

Citizens /Local governments

and Korean companies
Initiatives on sustainable development goals (SDGs)

local companies, and business partners, and to strive to achieve sustainablegrowth along with society.

● ‌Shareholders /Investors

Our business activities
We engage in business operations and activities for preserving the environment and contributing to local
communities through PPP in order to sustain water and environmental infrastructures.

Citizen’s life and industries

Local corporations

Water /
wastewater pipes

Water source forest
Water treatment plant

Sewage treatment plant

The Group’s Strengths
Mechanicaltechnologies＋

Electric
technologies＋

Maintenance know-how
and ICT

Water circulation

Business partners

Business partners

Three activity areas

Operation Engineering,and Procurement,
Maintenance and Construction(O&M) Business

Water
supplySewageworks(EPC) Business

METAWATER Group

Local communities /Society

Four Business Structures

Citizens / Local governments

The METAWATER Group will also contribute to achieving the

Universities /Educational institutions

Public andPrivate Overseas
Partnership BusinessResource
recycling

Local companies

goals of SDGs through its business and CSR activities.

(PPP) Business

Employees
Management through Economies of Scale
Training center for
facility operators

13

METAWATER REPORT 2018

Supply centerfor parts

Knowledge center

Information center
＋ BCP
(WBC)

METAWATER REPORT 2018

14

METAWATER business development

infrastructures,

For the sustainability of water and environmental infrastructures

Management and Operations Overview

Contributing to developing water and environmental
which serve as a lifeline for people and industry

METAWATER’s technologies support people’s lives

Three areas of activities
Water
supplyThe Group contributes to developing sustainableinfrastructure in the fields of water supply, sewage

Sewageworks

systems, and resource environment at home and abroad.

Resource
recycling

Supplying secure and safe water

Water
treatment
plant

Forest preservation●

Water purification technology using natural energy●

Most advanced and high-efficient water treatment technologies●

Ozone oxidation treatment technology to remove moldy smells●

Energy saving, low-cost and long-life ceramic membrane
filtration system

Households

Four businesses to achieve sustainable water andenvironmental infrastructures
Engineering,procurement,
and construction (EPC)
business

Operation andmaintenance (O&M)
business

Facilities and equipment
are designed andconstructed.

Facilities and equipment
are maintained andadministered.

Agriculture

Households

Water intake

Factory

Commercial buildings
and offices

Discharge
Commercial buildings
and offices

Power plant

Park

Purifying wastewater

Public and private
partnership (PPP)
business

Sewagetreatment
plant

Overseas business

Public and private
partnership projects arecarried out.

Providing solutions to
the needs of water
environments overseas.

●

Water treatment technology based on energy-saving
and energy-creating models●

Power generation technology using wastewater sludge●

Wastewater sludge recycling technology●

High-speed rainwater treatment technology forheavy rainfalls

Strengths of the METAWATER Group
Mechanical technology＋

Electric technology＋

Maintenance know-how and ICTThe Group is one of the few companies engaging in the water and infrastructure business with expertise in both mechanical

Waste recycling
facility

Reduction in environmental burden andrecycling of incombustible wastes●

High-accuracy waste sorting technology

and electric technologies. The Group provides optimal solutions with a comprehensive coverage from design and construction tomaintenance using maintenance know-how obtained over the years, as well cloud services based on advanced ICT.

Preservation of water quality
in downstream river andgulf (sea) areas*Technologies described in the illustrations are just some examples.

15

METAWATER REPORT 2018

METAWATER REPORT 201816

Messages from manager from each business section

Plant Engineering DivisionInternational Business Division

We will bring new value and contribute toachieving a sustainable society.

We will bring new value to the world together
with local business partners

Senior Executive Officer and Executive General Manager of

Director, Senior Executive Officer and Executive General Manager ofNoboru Okuda Plant Engineering Division●

The Overseas Headquarters operates businesses in countries around the world centered on North America and Europe, which have advanced environmental regulations,

treatment plants at home and abroad, as well as the engineering, procurement, and construction of a variety of devices used with the equipment. METAWATER

as well as Asian countries, which are enhancing infrastructure development. The businesses are conducted primarily by leveraging the Company’s unique technologies

is a unique corporation with expertise in both mechanical and electric technologies. We design and construct eco-friendly plants incorporating energy-saving,with emphasis on relationships with local business partners. Some data suggest that the aggregate scale of the global water markets stands at around 2.8 trillion yen inenergy-creation technologies, etc. using electric technologies that maximize our unique mechanical technologies and capabilities. Combining mechanicalterms of capital investment, which is 10 times larger than the Japanese market, and around 30 trillion yen in terms of operation and maintenance. Supported by increasing

and electric technologies and product development expertise, we develop efficient water treatment plants and sewerage treatment plants, save energy, andpopulations, these figures are likely to grow further in the future. By developing water and environment fields, the Company seeks to contribute to achieving Sustainableefficiently use resources.

Development Goals (SDGs) in the light of improved sanitary conditions, while building communities that offer comfortable lives and preventing global warming.

Given
the frequent occurrence of local heavy rainfalls in recent years,‌Initiatives for SDGs
■ Targeted SDGs

In‌ North America, Aqua-Aerobic Systems, Inc. (AAS) became a subsidiarycumulonimbus clouds at an early stage, and project rainfalls to mitigate

base, supported by a competitive product portfolio including cloth media

flood damage. In addition, we work to improve confluences of rainwater

filter systems, and batch-type sewage treatment devices, etc., applying

and wastewater with high-speed membrane filtration technologies, which

its unique technologies, with which it has acquired a strong market

contribute to elevating water quality in rivers and marine areas.

presence, and distribution networks spread throughout the US. WithIn‌ the Sewage High Technology Demonstration Project (B-DASH Project)

AAS as a major operating base in the North American markets, we havesteered by the Ministry of Land, Infrastructure, Transport and Tourism,

gradually expanded our product lines including ozone generation devices●

processing capacity by installing a cassette in the filtration section using
the existing framework at the final sedimentation tank.
We‌ are proposing a number of solutions including fuel cell technologies, which
contribute to saving energy at treatment plants by generating clean powerfrom sludge digestion gas emitted through the process of sludge treatment.
We‌ are contributing to building local communities that offer comfortable lives●

through a disaster rehabilitation project on the coast of the Tohoku region.
●●

Internal meeting of engineers

Implementing
leading-edge technologies, including‌advanced water-quality improvement technologies, energysaving technologies, and clean energy power generation for
degraded water purification plants and sewage treatment
plants enables stable supplies of safe and clean water ofsufficient quality and capacity through plant construction.
Constructing
sustainable plants with downsized‌
technologies in response to a social environment withfalling populations and super-aging societies
Developing
technologies and supplying solutions for‌increasing sewage inflows due to abnormal weather
such as heavy rainfalls
Engaging
in disaster rehabilitation work centered on the coast‌of the Tohoku Region and contributing to building sustainablelocal communities by improving the water environment

Future developments
Looking at trends over the next 10 years, we will have to respond to significant environment changes, expansion of PPP projects, a serious
shortage of engineers and aging facilities, evolution and expansion of IoT and AI, and development of work-style reforms. To respond tochanging social and customer needs driven by these changes in the business environment, the Plant Engineering Business Headquarters willtake up the challenge and pursue optimal engineering, procurement, and construction, and bring about new value, thus contributing to achievinga sustainable society.
17●of the METAWATER Group in 2016. The company has a stable profit

lead to reductions in construction costs and improvements in sewerage●

Major business activities

we identify rain clouds using radar installed on high ground, detect

we are working on demonstration research for technologies which will●

Ichiro Fukushima International Business Division

The Plant Engineering Division is engaged primarily in the design and construction of mechanical and electric equipment for water treatment plants and sewage

Major business activities●

Management and Operations Overview

Strategy for the future

METAWATER REPORT 2018using its unique technologies for improving the environment, as well as
ceramic membrane filtration systems.
●

Initiatives for SDGs
■ Targeted SDGs●

Sellingsewage treatment devices and clean water‌devices in North America●

Developing
ceramic membrane filtration technologies in‌collaboration with overseas institutions●

Implementing
advanced energy-saving sewage treatment‌systems in Asia●

Diffusingin-vehicle water purification devices‌●

Creating
jobs and providing education through local‌
companies, subsidiaries, representative offices, andprojects in local areas

In‌ Europe and Singapore, in collaboration with local water-supply entities
and their subsidiaries, we seek to formulate and expand our businessbase centered on sales of mechanical devices such as the CeraMac®
system—an energy-saving and space-saving water-supply systemequipped with our ceramic membrane as its core.

●In‌ Asia, we are currently constructing the first machine of an advancedenergy-saving sewage treatment system in Vietnam, which has been
acknowledged as an overseas-oriented technology by the Japan Sewage
Works Agency. We intend to enhance projects in response to local needs,
including use of the Official Development Assistance (ODA) framework.

●In‌ other activities, we have sold a total of 24 in-vehicle ceramic membrane
filtration devices in five African countries and Southeast Asian countries.
We received a letter of gratitude from the Myanmar government for
filtration devices used at times of floods. As a result, we are contributing
to the development of local communities.

Future developments
In other markets, we will seek to acquire new business partners in order to develop our environmental technologies primarily throughinternational collaborations. Furthermore, we will strive to proactively enhance localized operations that root our businesses in local
communities and offer the world new value using the features of a Japanese corporation. As a result, we will continue to contribute to achievinga sustainable society.

METAWATER REPORT 201818

Messages from manager from each business section

PPP Division

We will continue to create and offer new services
that contribute to sustaining water andenvironmental infrastructure.

We will focus on formulatinga new business base as a front runnerin the PPP business.

Executive Officer and Executive General Manager of

Executive Officer and Executive General Manager ofMakoto Shimizu Service Solution Division

The Service Solution Division is engaged in business activities that include inspection, repair, operation, and maintenance of mechanical and electric equipment of

The PPP Division promotes PPP projects in the domestic water supply and sewage market. In Japan, we need to take early measures to resolve a string

domestic water supply and sewage facilities, as well as design, construction, operation, and maintenance of waste treatment facilities (bulk waste, incombustibleof issues including falling revenue and a lack of engineers in local governments operating water supply and sewerage projects, at a time when there

waste, and recyclable waste). Given a domestic water supply and sewage business facing degradation of facilities and equipment, there are high expectations of private

are declining populations, degradation of facilities and equipment constructed during the period of high economic growth, and major earthquakes andcompanies when local governments are experiencing financial squeezes and there are shortages of engineers and staff to operate and maintain facilities. The Service

torrential rainfalls. Since the implementation of the PFI Act in 1999, public infrastructure developments have been carried out through PPP, using capital,

Solution Division provides services through networks run by 30 operating bases across the country. Our services are oriented toward customers in local communities. For

technologies, and know-how of the private sector. Furthermore, the PFI Act revised in 2011 incorporated the “Proposal System by Private Sectors.” PPP

instance, if a customer experiences an emergency, such as a failure or problem with mechanical and electric equipment, we visit them immediately to provide support.

projects using the private sector with the scope for wider area operations are likely to expand further.

Major business activities
●

●

We
‌ provide wide-area administration services for facilities, based on theInitiatives for SDGs
■ Targeted SDGs●

We‌ undertook the “Comprehensive Consignment of the Arao City
Water Business, etc.” in 2016, which was a consigned project package

and registry services for equipment and devices to support asset

comprehensively covering areas from customer services to asset

management.

management for water supply facilities. When launched, this consigned

We
propose optimal solutions to achieve energy savings, automation,‌In‌ the same year, we also participated in a project related to a third-sector

We
strive to strengthen partnerships with local companies in order to‌company, Kitakyushu Water Service Co., Ltd., with joint investments from theoffer more stable and local-community oriented services.

municipal government of Kitakyushu City, Fukuoka Prefecture, and six private●

Contributing
to generating and supplying safe and clean‌water by maintaining the functions of clean water
treatment equipment and devices
Contributing
to stable operations by maintaining the‌functions of sewage treatment equipment and devices(maintenance of discharged water quality)●

Supporting
innovations and energy-saving maintenance‌
operations by offering new technologies and newservices, such as automated unmanned operation●‌‌Services for WBC-based and SaaS-type operations(providing software and software operating system
environment through a network)●‌‌D esign and operation of waste treatment facilities
with functions attached which enable local residents toaddress the importance of reducing and recycling waste,
and supporting their education and encouragement●‌‌Reinforcing the service solution business throughpartnerships with local companies

Maintenance management operation using WBC■ Targeted SDGs●

‌‌Activities ranging from design and construction tooperation and maintenance of water treatment plants,
including mechanical and electric equipment●In‌ the implementation of governmental projects requiring
full accountability to the head of the local government,
parliament, and general public, we propose appropriate
solutions for issues including coverage of a project andreasons for selecting consignee. A number of our uniquevalue-added services for PPP projects are also proposed.

●

Executionof a Business Continuity Plan (BCP) in the event‌of a natural disaster such as water supply activities
following the Kumamoto Earthquakes in April 2016.

companies, and are engaged in monitoring operations and centralized control
of municipal water and wastewater facilities and other wide-area projects.
●In‌ addition, we were consigned the Nakatsugawa City’s comprehensive watersupply consignment project (Gifu Prefecture) and other projects, and theconsigned areas covered were expanded, including involvement in business
operations for management and planning support and administration of watersupply and sewage pipelines, which had previously been undertaken by local
governments and governmental institutions. As a result, as a growing company,
our consigned business areas offering total solutions have expanded.

Completion ceremony of the Takizawa water purification plant in Aizuwakamatsu City

Future developments
In the future, in addition to conventional maintenance services, we plan to provide new services including a variety of outsourced services
related to stock and asset management, along with expanding PPP projects.
We also implemented the first profit-sharing system in Japan, in which profits are to be returned to a local government in the event thatpurchases and sales of recyclables (metals, cans, and PET bottles) resulting from the sorting process of a waste treatment, exceed targets.
Based on these proven achievements, we will continue to proactively promote initiatives that strengthen partnerships with local companies andlocal governments.

METAWATER REPORT 2018

Initiatives for SDGs

project was the first in Japan to provide comprehensive coverage.
●

●

19

Major business activities

Water Business Cloud (WBC) using IoT and cloud computing technology,

and unmanned operations using new technologies and services.
●

Masashi Sakai PPP Division

Management and Operations Overview

Service Solution Division

Future developments
Amid increasingly expanding business areas that are expected to be covered by the private sector, we have positioned the PPP business as a
growth area and seek to formulate a new business base targeting privatization and wide-area services in the water and wastewater businesses.
We have already participated in more than 30 PPP projects. In the future, we intend to promote the following three measures and work on
business expansion as a front runner in the PPP market: (1) creating projects making use of a proposal system under the PFI Act; (2) improving
efficiency and developing tools such as asset management tools using ICT; and, (3) promoting alliances and partnerships, and responding to
wide-area services with comprehensive service packages.

METAWATER REPORT 201820

Topics

Special feature 1

Participating in an exhibition of the STI* Forum at the UN Headquarters

Expansion of the PPP business-Responding to various needs

In June this year, the METAWATER Group gave apresentation introducing water supply and sewage
technologies that will contribute to achieving sustainable
development goals (SDGs) at the STI Forum held at theheadquarters of the United Nations (UN) in New York.

The public private partnership business is drawing attention for assuring the sustainability of water supply and sewage businesses
Expectations for private sector will grow further and business areas consigned to them will expand.
Headquarters of the United Nations

Conventional method

What is the STI Forum?

■ Main themes of SDGs

The United Nations holds a two-day Multi-stakeholder Forum on Science, Technology and Innovation (STI) for

Characteristics:

Specification-based order

Design and construction of equipment

An order method where a public entity determines

are ordered to a private company forthe specifications requested for the project.

Sustainable Development Goals (SDGs) every year. To promote the use of science, technology, and innovation,

each item of equipment. Operation of

stakeholders including UN member nations, private sector, and scientific organizations around the world get

equipment is undertaken mainly by

together, discuss relationships between SDGs and science technologies, and obtain various opportunities fora local government or is consigned

matchmaking, cooperation, and forming the ability to fill gaps in technical needs.

partially to a private company.

EPC

O&M

Project scale: up to 1 billion yen
Construction period :Project size :1–3 years

Over 1 billion yen at the maximum

Machine equipment

Operation

Electric equipment

Maintenance and inspection

Management and Operations Overview*STI is the abbreviation for science, technology, and innovation.

More than 1,000 people from countries around the world attended this third Forum.
The STI Forum set up corners to present private sector activities that contribute to SDGs. We also participatedin the exhibition at the request of the Japanese government, the co-chair country of the forum. We are seriously
committed to engaging in activities for SDGs as a corporation operating water infrastructure businesses at home

Further comprehensiveness

Performance-based orderDBO‌A comprehensive package of projects

An order method where a public entity

Project size:

covering design and construction

determines only performance requested forand operation and maintenance ofthe project and the consignee proposes thefacilities is consigned to a private

specifications.

and abroad. At the STI Forum, we presented water treatment technologies adopted in Japan and overseas.
Mr. Toshiya Hoshino, Ambassador to the U.N. and co-chair of
the STI Forum, visited our booth and encouraged us.

In-vehicle water purification device drew attention from African countries
In the water supply field, we presented a water purification device with a ceramic
membrane, which enables safe water to be generated in areas without a watersupply or in the event of a disaster. In particular, government groups in African andother countries that are suffering seriously from the depletion of water and related

Ambassador Hoshino, Deputy Permanent Representative of Japan to the United Nations (fourth fromthe left), Director Fukushima (third from the left), and participating members of the Company

Characteristics:

Several billion – Several tens of billion yen

DB

O&M

Construction period:

Construction period:

3–6 years

company. This increases the level

PFI

15–20 yearsof freedom in facility management,

DesignOperation

resulting in optimizing all aspects

Civil engineeringand construction

Maintenance andinspection

UN parties responsible for those countries, raised a number of questions on theof operations from design andin-vehicle water purification device, which can be used in areas without a water

construction to operation andsupply or in an emergency in the event of a disaster.

maintenance.

Funding

Machine equipment
Electric equipment
etc.

Representatives of the Mozambique government visited our booth, saying that
Mozambique should be able to purchase this device with its own financial
resources, in addition to Official Development Assistance (ODA).

US-Japan combined sewer improvement technologies
responding to climate change
Explaining the in-vehicle water purification
device to Mozambique government personnel

The in-vehicle water purification device used
in African and Southeast Asian countries

The combined sewer system has a defect in that if flood water from rainwaterflows into sewage pipes in the event of a heavy rainfall, it causes discharges of
untreated water into rivers and the sea. We presented technology to improve the
combined sewer system. Because the combined sewer system contaminates rivers
and the sea in rainy weather, it has become a serious issue even in developed
countries with an advanced sewage infrastructure.

Explaining the combined sewer improvement
technology to participants from China

AquaPrime, combined sewer improvement
technology developed by Aqua-Aerobic Systems, Inc.

Both we and our US subsidiary are tackling this issue seriously. Participants from

Further comprehensiveness+ wider area management
Projects with comprehensive coverage
and wide-area services will result in
efficient business operations by the

Structure for responding to Concessions, etc., which are expected to increase from 2021

Training center for
developing equipment operators
Training operators who engage inequipment operations in various areas

private sector. Application of ICT could

Knowledge center

Parts supply center

Support for accumulating, sharing, andpassing on knowledge of project operationsof business entities varies by region

Centralization of procurement and supplyof repair parts, etc.

help enhance wide-area services,

ICT base to share information in
real-time and analyze and use
information collectedleading to more efficient business
operations.

the US and China took an interest in our presentation.

Human beings/information/things

Water significantly affects the sustainability of society, economy, and environment“Access to clean water is a crucial foundation for poverty eradication and sustainable development. At the same time, climatechange contributes to an increasing range and patterns of rainfalls, which makes water one of the most significant factors
affecting the social, economic, and environmental dimensions of sustainable development.“ (by the co-chair of the STI Forum)“The STI Forum is part of the Technology Facilitation Mechanism (TFM) of the United Nations. Participation by exhibiting
companies, researchers, and experts from various fields reflects the existence of a sound spirit of innovation and cooperation.
Now is the time when we should accelerate our actions.” (The United Nations Department of Economic and Social Affairs)

21

METAWATER REPORT 2018

Facility A

Facility B

Facility C

Facility D

To meet growing needs for operations with a comprehensive scope and wide-area services, we are seeking to further expand the ICT
base, while formulating a structure to train operators engaged in equipment operations in each local area, a structure to support theaccumulation, sharing, and passing on of knowledge on the project operations of business entities in various regions, and a structure
to centralize procurement and supplies of repair parts, etc. First, in 2017, we established and implemented a training center to develop
equipment operators.
METAWATER REPORT 201822

Special feature 2

METAWATER’s PFI business and contribution to SDGs

Case 2 Miyagi:

The first approach in the domestic market:
PFI project consigned to us as a package comprised of
facility renewal and operation/maintenance of purification plant

First-in-Japan financially independent PFI project for centralized
treatment and purification and management of effluent discharged
from a marine product facility hit by the Great East Japan Earthquake

Project “Kawai Purification Plant Cerarocca” was consigned to METAWATER Group
in 2008 and the operation started in 2014.
We are engaged in the operation and management of a special-purpose company(SPC), “Water Next Yokohama,” as its representative. By making positive use of
ICT, design and construction by using geographical conditions and optimal use ofoperation know-how of private companies, we have improved efficiency, saved costand reduced environment impact compared with the conventional purification plants.

We serve as the representative company of SPC “Fishery Support
Onagawa,” which started operations in 2015, and are engaged incentralized processing and purification and management of effluent
discharged from a seafood processing complex in Onagawa-cho,Miyagi Prefecture.
The Fishery support Onagawa is operated in a collaboration between
our Group and several regional companies to protect good fisheryfields and have the early recovery of marine product processing facilities.

More water processed withless than half the site area
Processing volume

1.6

times

Development of energy-efficientand energy-creating facilities

1. Establishment:		 January 22, 2009
2. Project method:		 BTO (Build Transfer Operation) method
3. Project period/construction: April 2009 – March 2014
Removal of previous facility: April 2014 – March 2015
Operation:		 April 2014 – March 2034
4. Water treatment capacity: 172,800 m3/day
5. Purification method:		 Ceramic membrane filtration

Introduction of ICT

60% reduction

Effluent

Adoption of ceramic
membrane filtration system

Approx.

Approx.

40% reduction

Oil

Water including
blood

Centralized processing of effluent discharged frommarine product-related facility damaged by thedisaster contributed to reducing reconstruction
costs and resuming operation quickly.

Contribution to SDGs

Contribution to SDGs

■ Targeted SDGs

■ Targeted SDGs

SeawaterFishery Support
Onagawa

Beforetreatment●

Supplyingsafe and clean water by adopting a‌ceramic membrane with a pore size of 0.1 μm
able to prevent protozoa from passing through it.

●

Full‌ and effective use and recycling of solid content
and sludge as construction materials, etc. throughthe process of cleaning raw water to dewatering●

Building
energy-saving equipment making best‌
use of different levels of energy between water
source and water purification plant

●

Water
treatment and recycling water used‌for cleansing a ceramic membrane or filtrate
resulting from dewatering sludge

Developmentof energy-creating equipment that‌
enables significant reductions of CO2 using solar
energy from the facility’s roof●

METAWATER REPORT 2018

Establishinga facility to communicate the‌importance of water and offering the public aplace to learn about water

Treatedwater

Onagawa Bay
quality ofwater was improved

After
treatment

Effluent treatment plant adjacent to the seafood processing complex

Ceramic membrane filtration system23

1. Establishment:
February 12, 2014
2. Project method:
PFI (Private Finance Initiative) &			
BTO (Build Transfer Operation) method
3. Project period/construction: April 2014 – September 2015
Operation:
April 2015 – March 2035
4. Water treatment capacity: 2,000 m3/day
5. Purification method:
Pressurized floating + circulating typenitrification and denitrification treatment+ high functional dehydration + drying

Centralized processing and purification and managementof wastewater with METAWATER’s technology

Seafood processing complex

Approx.

Chemical cost●

Overview of Fishery Support Onagawa Co., Ltd.

Labor required for operation and maintenanceElectric power consumption

40% reduction

Overview of Water Next Yokohama Co., Ltd.

Management and Operations Overview

Effluent treatment facility reconstruction project for the seafood processing complex in Onagawa-choCase 1 Yokohama City, Kanagawa: Kawai Water Treatment Plant Redevelopment Project

●

●

●

Adoptionof effluent treatment system, “pressure floating +‌circulating type nitrification and denitrification treatment”
with a proven record of a number of stable operations
enabled centralized processing of wastewater generated
from fishery processing, and elimination of pollution thatadversely affected water quality in Onagawa Bay
Sale‌ and recycling of sludge as a raw material for fungi
fertilizer, by dewatering generated sludge and drying it within
the facility’s site, leading to a reduced environmental burden
Reducing
amount of chemicals consumed, given the‌feature of raw water that it varies daily and annually

●

Study
and implementation of energy-saving‌
operation methods such as intermittent operation●

Formulationof fair and universal fee structure‌with centralized management, including a billcollection service●‌Support for local communities and society by participatingin various events of Onagawa-cho to contribute to therestoration and sustainable growth of the town

METAWATER REPORT 201824

Environment

METAWATER Group’s ESG

Aiming at sustainable growthof corporate value

CSR proposed by METAWATER Group

METAWATER Group’s ESG activities

E

Vibrant
corporate climate

Issues to be resolved

Examples of our major activities● Environmental preservation and biological diversity activities● Operation and management of eco-friendly water purification plants using natural power
Watersupply area
including solar energy

Natural resources● Development of UV-LED treatment device for a water purification plant to achieve energy

savings and long-life operation

Environment
Climate change● Development of sewage system with the concept of “creating energy” replacing “using energy”

Sewagearea● Development and commercialization of sludge treatment technology that enables recycling useof wastewater sludge through conversion into charcoal

Wastewater andwaste substance

Basic CSR

Reducing
environmental burden

Contribution to society andthe earth through water andthe environment

S
Socialsustainable development of our society and the global environment

Executive Officer,
Executive General Manager,
CSR Promotion OfficeG

Governanceand risk management, which serve as a platform for appropriate corporate management. With these core

● Promoting work-style reforms; enhancing working lives of female employees; developing an environment tosecure the working lives of people with disabilities

Activities for contributing
to local communities

solutions to social issues associated with the environment, society, and governance (ESG).
Meanwhile, the METAWATER Group set out its major goal to “Promote strengthening of ESG as a water

Issues to be resolved
Corporate GovernanceInternal controls● Promoting PPP business through collaborations, partnerships, and complementary relationships with local

governments, partnership companies, and local business entities● Quality assurance for products and services offered and establishment of health and safety criteria and compliance● Local community contribution activities in collaborations with local governments, awareness activities for

citizens, educational activities for next-generation children, and support for disaster recovery and restoration

Examples of our major activities● Assuring management transparency● Forming Compliance Working Group and implementing compliance education

Corporate activities● Reinforcing risk management

Risk management● Improving security measures for construction workplaces

Complianceactivities and the platform comprising eight working groups under the CSR Committee, we are working on● Strengthening Business Continuity Management (BCM) activities

Engagement in SDGs

infrastructure company” in the Medium-Term Management Plan 2020” with the following key themes.

●

Improving efficiency and strengthening management structure

CSR is promoted in●

Promoting active dialogues with individual stakeholders

eight working groups.

CSR Committee

Risk Management
Sub-Committee

Social Contribution
Working Groupsustainable value for society■ CSR promotion system

Information DisclosureManagement Working Group

Business Continuity Management (BCM) activities and improving the Business Continuity Plan (BCP) effectiveness

Environment Management
Working Group●

Environment Improvement
Working Group for Vibrant Life

Enhancing environmental education and local community contribution activities

Personal Information
Protection Working Group

Promoting contributions to environmental protection through reduced environmental burdens and business activitie●

J-SOX Sub-Committee●

lifeline business, the METAWATER Group is committed to accomplishing its tasks in order to create

METAWATER REPORT
メタウォーターレポート
2018
2018

Work style reforms/
diversity

Examples of our major activities

Compliance
Working Group

Governance

Shigeru Hatsumata

Reaffirming the importance of the mission of a corporation operating in the “Water and Environment”

25

environmental education

Engagement in SDGs

company that is a good corporate citizen, and to contribute to theuse their abilities; and strengthening corporate governance, compliance,

Issues to be resolved

Quality/safety/health

It is the mission of the METAWATER Group to be a fair and trusted

and work-style reform activities that motivate employees to work and● Internal activities to reduce electric power consumption in offices and initiatives forEngagement in SDGs

The METAWATER Group continues togrow together with the development ofcommunities and society.

forming and cultivating a “vibrant corporate culture” through diversity● Reducing environmental burden

Our offices

Sustainable development of society
and the global environment

through CSR and business activities. Our core CSR activities comprise:clouds with radar and rainfall projections

Waste recycling ● Streamlining the recycling of incombustible waste at a garbage recycling plant using
facility
sophisticated sorting technologies

METAWATER’S ESG

SocialCSR through business activities● Mitigating flood disasters through technology that enables the early detection of cumulonimbus

METAWATER REPORT 2018

26

E

Environment
We are positively engaged in technological development that contributes to environmental preservation and reducing environmental
burdens, while promoting the active use of natural energy sources and the development and introduction of energy-saving and energycreation technologies.

04

EnergyIncineration system using fluidized bed turbine

Sewage technology(Simplified offering type joint researchwith Tokyo Bureau of Sewage)

Ecological incineration using a turbine driven by discharged heat01

Water technologies

Renewal, operation and management of entire water treatment plant〈Kawai Purification Plant, Yokohama City〉

Blower for sending air into a furnace during sludge incineration is operated with a significant amountof electric power. We developed a fluidized bed turbine incineration system adopting a turbine driven
by discharged heat instead of electric power.This system can reduce power consumption by about 40%

Eco-friendly water treatment using natural powercompared with the conventional system.

Photovoltaic power generation equipment

Filtration without power consumption by using altitude difference

Photovoltaic power generation panels are installed on the roof of

Water derived from the Doshi River is led to a water distribution tank after

water distribution tanks. Making effective use of natural energy leads

being treated with a membrane filtration system without using a pump.

to a reduction in power consumption of about 40% compared with theFiltration without power consumption is realized by using the difference inconventional system.

geographical altitude from the water source to the water treatment plant.

Preheater

Incineration system using fluidized bed turbine

Tower for processing
exhaust smoke

SludgePreheater
SludgeDust

Preheater collector

Preheater

Difference in water level 11.5m

Wastewater technology (B-DASH)(FY2014 Demonstrative Project**)

Non-aeration recycled water treatment demonstration project〈Shimoji Water Reclamation Center, Kochi City〉

Reducing energy consumption while securing high quality of treated water

Turbine(supercharger)

Fluidized bed blower

05

Sewage technology

Conventional System of fluidized
bed turbine

System of fluidized bed turbine

Sludge fuel project〈Kosai Purification Center, Shiga〉

Producing resources by making wastewater sludge
into carbide

Aeration is the most power consuming process in treating sewage water to make treated water in our country. We, incollaboration with Kochi City, Kochi University and Japan Sewage Works Agency, developed an energy-saving type of

possible to produce biomass fuel from the sludge through its carbonization treatment

water treatment technology to supply oxygen using the air-liquid contact process under ambient pressure without using

and use the fuel in power plants or steel works as an energy source.

an aeration blower. This resulted in reducing power consumption by 53%*1 compared with conventional technology.

Compared with the conventional incineration/melting facility, carbon*1 Based on estimate when compared with conventional activated sludge process at treatment level of 50,000 m /day.

Dustcollector

Air

The incineration ash derived from incinerated wastewater sludge has been
conventionally disposed of as industrial waste. However, this technology makes it

3

Fan to prevent white smoke
Induction blower

Incinerator

Discharged heat
Air

02

Fluidized
bed blower

OthersIncinerator

Water level reached in the plant TP+102.0

Membrane filtration system Water distribution tankTower for processing
exhaust smoke

METAWATER’S ESG

Effort to reduce power consumption byusing natural power to lead water, for instance.

Doshi River

Conventional system

Reducing power consumption
in plant by more than 40%

emissions can be reduced by about 11,651 tons (equivalent to theemissions from approx. 3,800 general households) annually.
Sewage-sludge-derived fuel (Carbide)

03

Wastewater technology (B-DASH)(FY2013 Demonstrative Project**)

Technology demonstration study of innovative system to transform wastewatersludge energy by optimizing dehydration, incineration and power generation〈Sewage treatment plant in Ikeda City, Osaka〉

Shifting from the use of energy to the production of energy
We developed an innovative sludge treatment system in collaboration with Ikeda City. By combining and optimizing
each of our sophisticated technologies with enhanced efficiency and functionality in dehydration, incineration andpower generation processes, it is possible to reduce the life cycle costs, energy consumption and discharge ofgreenhouse gases. This resulted in reducing energy consumption by 77%*2 compared with conventional technology.
*2 Based on the following estimate: Amount of sludge treated with dehydration treatment: In the order of 100t/day.
	Estimate of introduction effect based on the assumption that the technologies are introduced to all three pieces of equipment (i.e. low moisture
content dehydration system, low air ratio energy-saving incineration system and high efficiency discharge heat power generation system.)

06

Sewage technology

Sludge treatment system improvement/operation〈Toyokawa Purification Center, Aichi〉

Power generation using wastewater sludge
Biogas (methane) generated accompanying the treatment of wastewater sludge
is used for power generation. Reducing sludge treatment costs and greenhousegas discharge is sought by making positive use of the Feed in Tariff (FIT) systemstipulating mandatory purchase of regenerative energy.

**B-DASH Project
Abbreviation of Breakthrough by Dynamic Approach in Sewage High Technology Project. By accelerating development and commercialization of new technologies, efficiency of energy use andreduction of life cycle costs in the wastewater business are promoted. It is a demonstration project that has been implemented by MLIT since FY2011 to support overseas development of thewater business.Consignees installed a full-scale plant in their sewage treatment plants and demonstrated cost reduction, reduction of the emissions of greenhouse gases and so forth.

27

METAWATER REPORT 2018

METAWATER REPORT 201828

E

Environment

New technologies

03

The METAWATER Group is engaged in activities mainly for next-generation solutions merging mechanical and electric technologies as a strengthof the Group, ICT that can be used for efficiently maintaining and managing infrastructure, joint studies with business partners on developing
more sophisticated technologies, and open innovation.

Recycling technology

Sorting equipment

Reduction in management and operation costs withhigh-accuracy waste sorting
When treating incombustible wastes, recyclable wastes such as plastics and plastic (PET) bottles
are sorted for recycling in order to reduce environment impact. While sorting processes are

01

Ozone/accelerated oxidation treatment technology

Water technologies

With high efficiency, removes substances causing moldy smells produced by algae.
Moldy smells caused by algae pose a serious problem to water treatment plants
using lakes or ponds as a water source in the vicinity of an urban area. To address
this issue, ozone/accelerated oxidation treatment technology was developed.
This technology eliminates moldy smells with higher efficiency compared with the

Mechanism of ozone/accelerated oxidation treatment technology
By adding hydrogen peroxide, generation of hydroxyl radicals (-OH) withhigher oxidizing power than ozone is promoted and the efficiency ofdecomposing substances causing moldy smells is enhanced. Hydrogen
peroxide also works to suppress the generation of bromide ions, a
byproduct of ozone treatment.

Raw water

Coagulation andsedimentation

Sand filtration

Water with smell

Coagulates contaminants andcauses sedimentation

Filtrates contaminants

Tap water

Biological activatedcarbonOzone /
Accelerated oxidation treatment

Tasty water

Adsorption of smells and organisms

Decomposition of smells and organisms

02

Water technologies

Ultraviolet treatment equipment for water treatment facilities using
ultraviolet light emitting diodes (UV-LED)

METAWATER Group became the first company certified with JWRC Standard Conformity for its UV-LED
treatment system.
UV inactivation is one of the ways of controlling chlorine-resistant pathogenic
protozoa including Cryptosporidium in the water treatment process. Because the useof mercury is being restricted internationally, UV-LEDs are attracting public attention

accuracy sorting, as well as minimizing labor and associated costs.

Reduction of life cycle costs related to management and operation

High-accuracy sorting is possible

Because this waste-sorting equipment can sort incombustible wastes into noncombustible heavy substances, combustible light substances and fine granular
substances, the workload associated with manual sorting can be minimized, andthis results in a reduction in workforce and operation costs.

The waste-sorting equipment is arranged before the manual sorting process toeliminate film- or sheet-type combustibles that hinder manual operations. This
allows for high-accuracy sorting by preventing workers from overlooking the items
to be screened out during manual operation.

Percentage of reduction in workforce for manual sorting: 10%–30%

METAWATER’S ESG

level achieved by ordinary ozone treatment while making it possible to elongate thelife of bio-active carbon through load mitigation.

basically conducted manually, the METAWATER Group’s waste-sorting equipment allows high-■ Mechanism of sorting

Superb effect in rationalizing sorting of plastic containers
and packages

WastesWhen recycling plastic container and packages, prohibited substances or metalmust not be included. Because this equipment sorts metals automatically into heavy
substances, finding and removing them during manual operation will become easier.

Wind
Light substances(combustibles)
Granular
Heavy
substances substances

04

Sewage technology

Low-moisture-content sludge dehydrator

Realization of low moisture content in dehydrated sludge
Conventional one- and two-pack type sludge dehydration has
problems related to moisture content and processing costs.
The post-injection two-pack type belt press dehydrator that
we developed is a dehydrator integrating an advantage of theconventional two-pack type and those of our new technology. Low
moisture content is achieved with a lower dose of chemicals.

Primary dehydration section
Scraper screw

Post-injection
Compaction
Non-organic coagulant
unit(polyferric sulfate) Gravitation

Preliminary
dehydration zone (2)thickening zone (1)PlowPreliminary
dehydration roller

Thickening cloth filter
Volume reduction
Ultra-low speed dehydration(long time)

Intensive thickening(volume reduction)

as a next-generation luminous source.
Our UV-LED treatment system adopts the world’s top-class high-power UV-LED as aluminous source and provides approximately three times longer life than UV mercury
vapor lamps mainly by controlling the output of a UV-LED and optimizing irradiation.

Polymer
SludgeDehydration lower cloth filter

Dehydration
upper cloth filter

Dehydrated cakeSecondary dehydration section

Using UV-LED as a luminous resource, our system was the first to be acknowledged
with the Certificate of the JWRC Standard Conformity of Ultraviolet Irradiation

Lower moisture content in sewage sludge

System by the Japan Water Research Center.
We will promote diffusion of the system, while working to develop a next-generation

For incineration

For disposal

ultraviolet treatment system, which has a LED’s characteristics of energy efficiency

Can reduce incineration cost

Can reduce transport costand long life, and can be adapted to a large-scale water purification facility.

29

METAWATER REPORT 2018

METAWATER REPORT 201830

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Environment
New technologies

05

Wastewater technology (B-DASH)(FY2015 Demonstrative Project)

Demonstration project of stormwater management technology for
local heavy rainfall in urban area

06

ICT supporting sustainability of water and the environment

ICT technology

Response to challenges in water supply and sewage business with Water Business Cloud

Minimizing flood damage by early phase detection and prediction of cumulonimbus by using radar
Water Business Cloud (WBC) was developed by seeking to realize a cloud-type platform that can be used anytime and anywhere by all the people

METAWATER’s proposal has been adopted as one of the B-DASH annual projects six times* in eight years.

involved in the water and wastewater business. This is an innovative business model developed by METAWATER for the water and wastewater business

B-DASH is the abbreviation of Breakthrough by Dynamic Approach in Sewage High Technology, and the~ Realization of smart stormwater control in sewage ~Ministry of Land, Infrastructure, Transport and Tourism (MLIT) commenced the B-DASH Project in FY2011.

in response to the transformation of a business model by the development of cloud computing technology. Because services on the Internet can be used,
you do not have to prepare your own system as was the case with the existing business model.

In this demonstration study adopted in 2015, we demonstrated an innovative stormwater control

Realization of maintenance and improvement of water and wastewater businesstechnology over two years in collaboration with New Nippon Consultants Co. Ltd., Furuno Electric Co., Ltd.,
Emori Infotech Co., Ltd., Nihon Suido Consultants Co. Ltd., Kobe University, Fukui City, and Toyama City.
This demonstration technology is a combination of an urban-area radar system, short-time rainfall

ICT platform (cloud environment)

prediction model, and real-time run-off analyzer. Damage associated with flooding is minimized byFindings / Know-how

supporting effective and efficient operations of flood-prevention facilities (e.g., stormwater storage ducts)

SolutionsDataand promoting self-help, as well as mutual support activities of local residents. The guideline of thisdemonstration technology was published by the National Institute for Land and Infrastructure Management
Private company

1

Hidden rain cloud is captured promptly
by three radars〈urban area radar〉

2

Predicting volume and location of
upcoming rainfall〈Short-time rainfall prediction model〉● Predicts● Compact and low-cost radar that covers

specific region such as urban area.

Cumulonimbus● By arranging multiple radars in atriangular form, areas omitted in themeasurement can be drasticallyreduced compared with conventional A radar installedin Fuji City
single radar observation.

Water businesscompanies

rainfall in 30–60 minutes
depending on the purpose.
● Supplies effective forecast information to
support operation of sewage facilities andto promote self-help as well as mutual
support activities of local residents.

Public organizations

Companies inother sectors

Japanesegovernment

Predicts the extent of flooding in certain areas

Amid an increase in the number of aging facilities, we need to● Analyzes the run-off phenomenon on the ground surface andDamage is reduced with highly accurate
flood prediction information.

that the ICT platform and cloud system make it possible toeffectively collect, organize, store, and use maintenance data,
which are generated from day-to-day operations, and thereby

EffectDistribution system

Estimated effectDistributes detailed information about rainfall
and flooding prediction
Information screen (example)

Maximizing the ability of stormwater
storage facilities

Makes it possible to secure timenecessary for early-phase vigilance

Demonstrators: Joint research group organized by METAWATER Co., Ltd.,
Ikeda municipal government, Ena municipal government
Water Purification Center in Ena City, Gifu, and five other facilities
Demonstration years: FY2018 onward

10:00

Movements and strength ofrain are displayed on map.

Self-help/mutual support(screen indicating water level in ducts)
Water level in underground ducts for draining
rainwater is displayed.

Advance discharge may bepossible if there is still
margin in estimated waterlevel at the destination ofdischarge from storage duct.

Pilingsandbags

10:25

Effective use of storage
ability by having advancedischarge will reduce
damage caused by flood.

* FY2011: Demonstration study for energy management system using intensive solid-liquid separation technology
FY2013: Technology demonstration study of innovative system to transform wastewater sludge energy by optimizing dehydration, incineration and power generation
FY2014: Non-Aeration Recycled Water Treatment Demonstration Project
FY2015: Demonstration Project of Stormwater Management Technology for Local Heavy rainfall in Urban Area
FY2017: Technology demonstration study to improve processing performance of final sedimentation tank
FY2018: Demonstration research of continuous stock management system technology in a cloud environment with maintenance data as original sources

31

METAWATER REPORT 2018

Estimatedwater level

Use
Achieving effective
and continuous
stock management

Regularinspection

RepairReportingSpecialfailures Investigationetc

2 Real-time evaluation andvisualization system

3 Performance-degradation

prediction and support system

Evaluation items

Current

Planned sewage volume:
Facility A approx. 50,000 m3 a day
Facility B
Facility C

New

Degradation prediction model, etc.

Treatment equipment, etc.

Evaluation of degree of soundness
Preparation of stock
management plan

Degree ofsoundness Past
5
4
Available data
3

2 for reviewing
Support1
evaluation items

Present
FutureprojectionTime■ Characteristics of this technology

Storage
duct

After 25 minutes

Uniquecode

Cloud server
System registry Library

Organization/
Storage

Demonstration areas: Sewage Treatment Plant in Ikeda City, Osaka,

MovingvehiclesEstimatedwater level

organization system

Collection

Supports self-help/mutual assistance

Discharge in advance

Use

Demonstration coverage
1 Source data collection/achieve continuous stock management.

Facility operation support

Storageduct

Organization/
StorageCollection

establish effective stock management. We have demonstrated

Distribution

Radar precipitation screen[Challenge] Shortage of skilled engineers,
reduction of income, aging of facilities, etc.

METAWATER’s “Demonstration research of continued stock management realization systemtechnology in a cloud environment with maintenance data as original sources” has been adopted
as one of the B-DASH projects for FY2018.

〈Real-time run-off analysis technology〉

downstream area accurately on real-time basis.
● Time needed for analysis has been reduced compared withconventional technology. Distributes flood prediction information.

Research
institutes

TOPICS

Development status of cumulonimbus /Rainfall prediction information

3

Academic institutions
Universities

Local government

WBC offers many functions including a wide-area monitoring service to address various challenges
that cannot be solved only by plant technologies.

High definition/high accuracy

METAWATER’S ESG

Sharing / Shared use of informationin May 2018.

10:00

After 25 minutes

Early-vigilance actions (placementof sandbags, relocation ofvehicles) are taken by local
residents based on information
about predicted flooding.

10:25

Vigilant actions arecompleted before actual
flood occurs, which
reduces the damage
caused by flood.

1

Source data collection andorganization system

The system provides centralized management to enable users to effectively collect, organize, and store various types ofmaintenance data located in different areas.

2

Real-time evaluation andvisualization system

The system allows continued evaluation and visualization of the level of soundness based on collected and organized
maintenance data

3

Performance-degradation prediction The system enables a predictable pattern of degradation to be drawn up based on analyzed data and progress of degradation of anand support systemappropriate project by retrieving soundness evaluation items, and assessment of optimal timing of measures

With the above three component technologies formed in a cloud environment, maintenance data generated through day-to-day operations are used to prepare various plans, thereby
achieving effective and continued stock management.

METAWATER REPORT 2018

32

E

Environment

Activities for reducing environmental burdens

Activities for environmental preservation and biodiversity conservation

Taking pride in operating businesses in the water and environmental field, the METAWATER Group strives to reduce environmental
burdens at construction sites at approximately 500 locations annually depending on project orders received, as well as 43 offices
nationwide.

The METAWATER Group is proactively engaged in forest preservation activities that foster water source forests. There are a variety of living
things in forests and water source forests, and we believe that the preservation of forests will lead to the conservation of living things andwater. We will continue these activities as an initiative to support a sustainable environment for the Earth.

Preserving a forest in Okutama
In Okutama, there is a forest where Japanese serows and copper pheasants designated as
endangered species live, and such forests are rare in other areas of Tokyo.
The METAWATER Group is engaged in forest improvement activities at the METAWATER Okutama
Forest (owned by Okutama-machi), jointly with the NPO Green Earth Center.

Weeding activity in Okutama

With the goal of “reducing power consumption by 1% from a year before,”■ Power usage(1,000 kWh)

3,834

consumption: turning lights out during lunchtime; leaving the office ontime, and turning out lights of an entire office on Super Refresh Day underwork-style reforms; and, turning off a PC monitor when leaving a desk inconjunction with information security measures.
As a result, electricity consumption and CO2 emissions in FY 2017 decreased

Power consumption

the METAWATER Group is proactively carrying out an exercise of turning off
lights in offices. We have implemented various initiatives to curtail power

3,787

3,777

2,400

2,300

2,223
2,200

2,162
2,113

2,187
2,139

1,000

3.8% and 2.7% year on year, respectively.

3,644

3,000

2,000

Yokohama City, as a representative of the special-purpose company (SPC)*. The plant generates
tap water by drawing water from Doshi Village (Yamanashi). We made an agreement, “Water● CO2-based conversion(t CO2)

3,931

4,000

Preserving water in Yokohama. Conserving water forests
We are engaged in the operation and management of the Kawai Water Treatment Plant in■ Power consumption (Office)Source Eco-Project W-eco∙p,” with the Water Works Bureau of Yokohama City, and support water
CO2-based conversion

Proactive exercise of turning off lights resulted in a
3.8% year-on-year decline in electricity consumption

METAWATER’S ESG

Proactive exercise of turning off lights resulted in a 3.8% year-on-year decline in electricity consumption

2,100

source preservation activities in the METAWATER Doshi Forest at Doshi Village.
*SPC: Abbreviation of special-purpose company. SPC is a company operated for a specific business purpose.

Preservation activities in Doshi Village

Preserving forests in Takao
A popular sightseeing spot in recent years, Takao has abundant natural forests where endangered
species such as varied tits and campanumoea maximowiczii are found.
We have participated in the Forestation Program at Takao sponsored by the Japan Alpine Club

Promoting paperless work environment andpurchasing eco-friendly items

0

FY2013

FY2014FY2015FY2016FY2017“Takao no morizukuri no kai” since its foundation. The program aims to restore diversified and

2,000abundant forests, and we have been engaged in forestation activities such as planting broad-leaf
trees, weeding, cutting vines from trees, and thinning.

The METAWATER Group has abolished the paper-based distribution of
meeting materials at executive meetings since FY2013 and introduced

Cutting trees at the tree-fostering ceremony

ways of viewing materials on a tablet. By introducing this method for otherinternal meetings, we are striving to achieve a paperless work environment

Preserving Satoyama in Hirakata, Osaka

throughout the company. At the same time, we are also working on

The Hirakata municipal government in Osaka City developed the Hirakata City Satoyama

purchasing eco-friendly items, and have replaced all internal-use papers

Preservation Basic Plan and has proactively worked on forest preservation. We participate inwith forest-certified papers.

Adoption of electronic manifest achieves 99.5% adoption rate

■ Number of manifests issued and rate of introducing
electronic format data
■ Electronic manifest

activities (offices and domestic construction works) varies due to type andand improve operational efficiency. Specifically, we selected service
providers that can support electronic manifests, adopted the advanceapplication process for using a paper-based manifest, and reinforced training
and education of staff responsible for industrial waste. As a result, theNumber of manifests issued

electronic manifests to accurately capture the amount of industrial waste

5,000
4,000

85.5%
651

611
88.8%

655

94.7%

99.5%
23

100
90

88.2%
80
70

3,851

4,841

4,910

5,770

4,610

60

1,000

50

0

40

adoption rate of the electronic manifest rose to 99.5% in FY2017 comparedto 94.7% of FY2016. (The rate nationwide was 55% in FY2017.)

33

METAWATER REPORT 2018

Volunteer members of Satoyama

(%)

325

3,000
2,000

preservation activities for the Tsuda area, part of the targeted coverage.

● Rate of introducing electronic format data

6,000

While the amount of emissions of industrial waste generated from businessvolume of construction works in each year, the Group has been promoting■ Paper-based manifest(cases)

FY2013

FY2014FY2015FY2016FY2017

Rate of introducing electronic format data

Approaches to industrial wastes at field

the activities of the Forest Volunteer Group Taketori-Monogatari NPO and engage in forest

Interview with staff in charge
I am responsible for forest preservation activities. We always give first priority to safety, because activities are carriedout throughout the year and activity programs vary, depending on location and season. I would like to release activity
reports more proactively so that readers can take an interest in the activities.

Eriko Yamano CSR Promotion Division

METAWATER REPORT 201834

S

SocialWith a management policy based on the idea that people are the most valuable assets, we respect diversity in all aspects including
human rights and employment, while working proactively on initiatives to achieve a work-life balance.

Aiming to become a company where women can work enthusiasticallyAiming to become the best company at which to work

We are promoting diversity. To become a company where female employees can work actively, we are developing a work environment wherefemale employees can advance their careers with greater motivation to work, in addition to expanding existing systems.

Holding discussion meetings for female employees with the theme of“childcare and career”

Promoting diversified work styles with respect for each individual

Given an increasing number of female employees every year in the METAWATER Group, we helda discussion meeting twice as opportunities to hear from female employees who had experienced
child birth and child care, about their working and private lives. Participants exchanged opinions
positively based on their experiences in managing family and careers. The discussions helped
young employees resolve their worries and problems.

Participants listening to panel discussions

The METAWATER Group has reinforced development of work-stylereforms since 2017. The labor market environment surrounding
employment and labor is expected to change further with a fallingbirthrate, an aging population, and a labor shortage. We consider
that growing both the company and employees and creating added
value through the adoption to these changes will result in a morecompetitive company.
Specifically, we launched a satellite office, which is aimed atdiversifying the work styles of employees as individuals, in order toreplace the conventional work style focused on time and location.
The satellite office was implemented in the headquarters forthe first time in FY2017 and is scheduled to be established at 10
operating bases nationwide in the coming years. To familiarize

employees with the satellite office, we also decided to give it thenickname “Island,” a name that was selected through an internal
posting. Introducing the satellite office has increased the efficiencyof employees’ commutation and also provides a work space forstaff on business trips and employees transferred away from theirfamilies, as well as a place for employees to be refreshed andcommunicate.
In addition, we have implemented various initiatives including
a tele-work system, which is available to all employees without
predetermined conditions, number of days, etc., and a four-day work
week system as a trial program. Furthermore, we set up the Opinion
Board for Work-Style Reforms to reflect the thoughts of employees,
as well as suggestions from the company. Consequently, we aremaking efforts to collect employees’ opinions and requests.
We will continue to positively develop initiatives that bring mutual
benefits for both the company and employees.

35

conference rooms/seminar rooms; coordinating rental of projectors and other equipment;
administering/mailing corporate catalogues, etc.

Work requested by individual division
Organizing/filing expense vouchers; tallying hand-written responses to questionnaires andconversion into electronic format; preparing various kinds of material; mailing order forms, etc.
Organizing mailThe METAWATER Group is also making efforts for each employee to develop acompetency. In line with the HR philosophy, “We support personnel who desire to develop
themselves, and provide them with opportunities to develop a competency,” various
support systems are in place.

Optional training system

We need to be aware that times have

We have an optional training system through which employees can voluntarily take trainingchanged and work styles that werecourses to develop their business skills. The system provides more than 200 courses throughcommunicate.

taken for granted to the present will begroup seminars and e-learning programs, and employees can choose these courses to meet theirBecausethe place has a Wi-Fi system set up, I can work during spare‌time when on a business trip in the same way as I do at my desk.

transformed significantly through work-needs. More than 800 employees take these courses every year.

style reforms. Changing a work style that is

I am taking advantage of that to exchange information andI‌ use the place for preparing materials, etc., and can concentrate on
my work there.

METAWATER REPORT 2018

Confirming the work assignment for the day at the morning meeting

Making employees’ name cards; sorting/collecting/distributing internal mail; setting up

Interview with staff in chargeThe‌ place is convenient, and I can work and refresh myself there.
● Because
employees from various divisions come to the place,‌●●Common in-house work

Initiatives to support each individual to develop a competency

Opinions of Island users●

As another initiative to enhance diversity, we are developing a work environment where
people with disabilities can engage more widely. Undertaking a variety of duties fromvarious internal divisions, employees with disabilities engage in a wide range of jobs. A
work assignment is determined each day after confirming status of health through radio
gymnastics exercises and a morning meeting.In recent years, new requests for work haveincreased as a result of high evaluation on the output of individual assignment. The scopeof work is widening for the team.

METAWATER’S ESG

Aiming to become a company where people with disabilities can engage more widely

familiar to employees will not be easy, but
I am working to improve this initiative incooperation with staff from the divisions.

Booklet on optional training courses

Hironori Ikeda
HR Planning Office

METAWATER REPORT 201836

S

SocialSocial contribution
As a member of the international society and local community, the METAWATER Group is
positively and continuously engaged in social contribution activities to achieve a sustainable
society.

Education/socialeducation
Support forareas hitby disasterFive
major areas

International
support/Exchanges

Environment
preservation*Description on
page 34

Havingrelationships
with people
through water

Local
contributions

International support / relationships
Participating in events, etc. related to water, we engage in international support activities in countries and regions where
our operating bases are located, as well as domestic activities to deepen relationships with foreign students in Japan.

Supporting Angkor Wat International Half Marathon
We have been participating in this charity marathon since 2013 to

Havingrelationships
with waterand local
communities

support antipersonnel land mine victims in Cambodia. We installed water

Contribution to local community

purification equipment using a ceramic membrane near the finish line toprovide runners with a refreshing mist shower.

We engage in various local contribution activities nationwide to deepen relationships with local communities as a good
corporate citizen.
Winners and President Nakamura

Sewerage event held with 5,000 visitors

Introducing Japanese water technology to 40
international students
We held a seminar to introduce Japanese infrastructure technologies

intended to introduce the water cycle and share the importance of water.

targeting foreign students in Japan. The seminar was organized jointly

Local elementary school children and visitors enjoyed the festival.

by the University of Tokyo in cooperation with the Ministry of Land,
Infrastructure, Transport and Tourism. The Group’s President Yasushi
Nakamura delivered a speech on the theme of “Water and Land.”The METAWATER annual water sprinkling operation
helped achieve about a 20°C℃ decrease in thetemperature of the road surface.

Support for disaster recovery and restoration

The METAWATER Group carries out water sprinkling every year in front ofSupport fordisasterafflicted areas

its headquarters using regenerated sewage water from the Shibaura Water
Reclamation Center (Tokyo), which has adopted its wastewater regeneration
technologies. In 2017, we sprinkled water in collaboration with local residents
and corporations supporting the event. The road surface temperature decreased
by as much as around 20°C from around 57°C to around 37°C

Sprinkling water in front of the headquarters

The METAWATER Group has been carrying out its unique activities and event programs to support the restoration ofdisaster-afflicted areas.

Opening a local product market
The METAWATER Group provides support to Onagawa-cho, Miyagi
Prefecture, which was seriously damaged by the Great East Japan
Earthquake. In 2017, we opened a local product market at the headquarters,

Education / Public education
Learning
about water

President Nakamura lecturing on water to foreign students

Many children visited our event during the summer vacation

METAWATER’S ESG

We held a summer festival at METAWATER Sewerage Museum Aichi
in Inazawa City, Aichi Prefecture with an exhibition and presentations

marking the second time products from Onagawa-cho were put on sale. The
market was a success with all products sold out.

The METAWATER Group holds special classes at schools and other venues, and introduces technologies and knowledge related towater environments, its main business line, with the aim of raising interest in water and leading to a better understanding.

Selling Onagawa’s local products to our employees

Supporting restoration of Onagawa-cho by
grilling sauries

Participating in the exhibition, “Children’s
Kasumigaseki Study Day” sponsored by the Ministryof Education, Culture, Sports, Science and Technology

Every year we call for volunteers internally who support the annual
Onagawa Saury Harvest Festival held in Onagawa-cho. The festival serves

We participated in the exhibition “Children’s Kasumigaseki Study Day”

10,000 sauries and our volunteer staff are in charge of grilling them.

held by the Ministry of Education, Culture, Sports, Science and Technology,
targeted at elementary school children during the summer vacation. We

Our volunteering staff grilling sauries

explained the water cycle with a water-cycle model made of paper, anddemonstrated a filtration experiment by making a sand separator using aChildren looking at a model with great interest

PET bottle. The children took a great interest in our presentation.

Interview with staff in charge

Holding a special class for high-school students toprovide actual experience of sewerage

We are engaged in activities that contribute to society and the Earth’s environment through a key element—water. Our

We hold a special summer class for high-school students so that they canas they relate to the METAWATER Group nationwide, such as activities to foster the next generation of children throughlearn about sewerage. In addition to a lecture, the class provides activities

education on water.

goal is to preserve the water environment by promoting social contribution activities related to water and enhance them

Shuichi Kato CSR Promotion Officeto give students actual experience, such as entering a manhole and visiting
a sewerage treatment plant.

37

METAWATER REPORT 2018

Presenting interesting features of sewerage

METAWATER REPORT 201838

S

SocialActivities for quality maintenance
The METAWATER Group has a basic quality policy, which is to ensure that all of its products and services meet optimal quality standards tosatisfy its customers, while striving to further improve the quality of maintenance and management, as well as customer satisfaction. Activities
to prevent problems from arising are among the essential quality maintenance activities. The Group is working on the following unique activities.

Activities to prevent quality problems: Distribution of Quality Topics
In the next activity, we plan to study forming a structure that allows
employees to access and view important cases as needed in orderto take lessons from past incidents and always keep them in mind
during day-to-day operations.

●Issuedand distributed seven times during FY2017‌●

Provided
details of two incidents in each publication‌●Described
important points to be learnt from those incidents‌●Distributed
through various means including delivery via intranet,‌■ Distribution flow of Quality Topics
Selectionof cases

Quality Topics

by division, and individuallyInterview with staff in charge
I am responsible for PRA education. I am engaged in preparing materials and composing educational content to make them

Incidents/
troubledatabase

Outline of Quality Topics

Discussion during PRA education

Distribution of Quality Topics
across the company

Quality Assurance
Officeclear and understandable to participants. The program has brought about various achievements including the merit that

METAWATER’S ESG

To prevent the reoccurrence of problems by learning from past
failures, we issue “Quality Topics,” which clearly describe
circumstances and factors of problems, and preventive measures,etc., and distribute it to all employees. Employees provided
comments such as: “Responsible staff in the Quality Assurance
Office treat cases sincerely, which results in employees having abetter understanding and preventing quality issues.”

educational program has yielded successful outcomes. For instance,group discussions by participants from various divisions led themto find they had different views on risks and measures. The PRA
program has another important objective of raising participants’awareness of their lack of skills and knowledge through group
discussions, in addition to making them understand the need toprevent accidents with equipment.

group discussions between junior employees’ group and experienced employees’ group have helped them recognize theirdifferent perspectives. Encouraged by a participant’s comment, “The course was helpful,” I would like to continue in my role.

Yoshihiko Hirao Quality Management Group

Returningcomments

TOPICS

Employees

Customer satisfaction activities: “Ha / Wa Ni No Kando Activity”
Interview with staff in charge

We have implemented the “Ha / Wa Ni No Kando Activity” with the aim that all employees should always understand thecustomer’s perspective when doing their work.

I am in charge of the regular distribution of “Quality Topics.” I try to provide concise articles with wording that is easy tounderstand for readers other than those in specialist divisions. Having a reader comment that it was “Useful,” encouraged
me in my role to help raise readers’ awareness of the need to prevent issues and motivate them in their work.

Outline of activity‌This activity aims to ensure that all employees of the METAWATER Group keep the following items in

Masazumi Minami Quality Management Group

mind when performing their roles, thereby raising customer satisfaction and contentment, which will leadto corporate growth.

Plant risk assessment education to prevent accidents with equipment
To ensure prevention of serious accidents and failures, the
METAWATER Group conducts a Plant Risk Assessment (PRA) ateach work process of operations, making efforts for continued
improvements.

PRA education is provided to on-site workers at the testing divisionor service division to avert worst cases.
PRA education is provided in the form of case studies, targetinga broad audience ranging from junior to experienced staff. This●Who
are our customers? (Ha/Wa)
‌

●

What
products and services are offered to our customers? (Ni)
‌

●

What
would satisfy our customers? (No)
‌

●

What
can we offer to customers to increase their satisfaction? (Kando)‌

Mascot, HANINO

Examples of activities

Ha/Wa Ni No Kando‌ Activities at the Quality Assurance Division of headquarters①‌‌All employees are to carry out the “Ha/Wa Ni No Kando Activity” throughout the year with an award■ Work processes in plant construction

ceremony held at the end of the fiscal year. As a result, we are making efforts to get all employees
motivated and to enjoy engaging positively in this activity.

39

Basic design

Detailed
designPRA

PRA

METAWATER REPORT 2018

Purchasing

Production

Inspection

Field
adjustment
PRA② ‌Activities in the workplace of the consigned water supply project at Arao City, Kumamoto Prefecture‌‌Two employees present their own examples of the “Ha/Wa Ni No Kando Activity” at the morning
meeting twice a week and employees exchange opinions. The contents of their presentations are also
shared with other employees.

METAWATER REPORT 201840

S

SocialEnhancing safety and hygiene
The METAWATER Group has the corporate philosophy that “No one will get injured or injure others,” under the firm position adopted by the
management. The Group engages in various health and safety activities in line with a basic policy that aims to prevent labor and transportation
accidents, and create a healthy and comfortable work environment by working together with collaborating companies.

Activities for improving health
The METAWATER Group engages in Group-wide health care activities to maintain the sound mental and physical health of each employee.

Heath management system

Safety activities

We established a health management center at offices including the headquarters, Nagoya Office,and Osaka Office, and industrial doctors, psychological counselors, and industrial health nurses

Strengthening safe driving education: 100% participation achieved

work there on a full-time basis. In line with the HR philosophy that people are the most valuable

The METAWATER Group has an internal driving license system for automobiles used on business andassets, we are improving employees’ health by placing the highest priority on employees’ healthissues an internal driving license after confirming an employee’s driving history and appropriateness.

and safety, and conduct individual meetings and health counseling throughout the year to urge
employees to actively engage in maintaining and improving their health.

A license is confirmed and renewed every year. A total of 1,197 licenses were issued in FY2017.
In FY2017, we stepped up safe driving education by setting the mandatory requirement of “Learning
the importance of accountability for accidents caused by employees.” We also strengthened
participation rate. In addition, as a monthly transport KY activity*, we also disclose information

Safe driving seminar

METAWATER’S ESG

educational programs targeting drivers and their supervisors, and both programs achieved a 100%
Health management center at headquarters

on actual traffic accidents to all divisions, raising employees’ risk awareness. As a result, we areworking to prevent road accidents.

Health-care activities*KY Activity: KY stands for Kiken (K, meaning danger) and Yochi (Y, meaning prediction).

To promote health-care activities, we plan and carry out a variety of internal programs.
In FY2017, we held a walking rally in which participants raced over a total distance of about 500
km (approximately 700,000 steps) on a virtual course starting from the Kumamoto Service Station

Winning a bronze medal as an excellent safe driving business entity

in Kumamoto City, the Group’s operating site, to the goal at the Okinawa Sales Office in Naha City,

As a result of various activities undertaken, we won a bronze medal* as an excellent safe

including visits to sightseeing spots, targeting completion within a three-month period. A total ofdriving business entity from the Japan Safe Driving Center under the jurisdiction of the

240 employees participated in the individual rally, while 43 teams of three persons competed in
the team rally. As a result, 132 individuals and 28 teams reached the goal.

National Police Agency. We were granted the award due to lower than national average ratewith respect to the number of traffic accidents and ratio of the number of traffic violations.
*Criteria for a bronze medal: 7% or less for the number of traffic violations and 2% or less for the number of car accidents causing injury or deathover the past three-year driving record

Award ceremony

Flyer announcing walking rally

Stress check
Improving safety through safety patrols●

We implemented company-wide stress checks in September 2016. In addition, we launched thee-learning self-care program targeting all employees as a measure to prevent mental disorder inAugust 2016. With these activities urging employees to be aware of their stress and to analyze theBranch office patrol

The METAWATER Group checks the status of safety andwork environment, we are creating a work environment where each employee feels motivated tohealth controls and provide guidance: On-site responsible

work positively and take initiatives.

managers conduct daily patrols of on-site areas includingof employees taking■ Percentage‌stress checks
Percentage
of stress
checks taken

FY2016FY201796%

97%

those of construction, maintenance and inspection, consigned
driving, and development and testing, etc., while branch offices
are regularly checked by the control division. In areas whereimportant guidance is required, we establish a monitoring patrol

Monitoring patrolof the Safety and Health Management Office and obtain safety

On-site diagnosis by outside
consultants

Safety lecture

diagnoses from a third-party consultant. In addition to the third

A healthy mind and body are very important factors for a company sustaining social infrastructure. Our job is to help
develop employees’ self-management abilities so that they can maintain a long healthy life, both after retirement

party’s findings, we explain details in a safety lecture to improve

as well as during their working lives. METAWATER is slightly different from other companies in that the number

workers’ understanding of safety.
●

Interview with staff in chargeof employees with mental health problems is not so large, but there are many employees with physical problems
that have adverse impacts on their work. I would say that the most important task for the Company is to have

Patrols by board members

countermeasures for adult life-style related diseases such as metabolic syndrome. With retirement ages getting older

Board members including the president patrol work sites themselves, checking the progress ofin the future, health-care management from a young age is crucial. Health-care practices may need to start not after

projects, as well as the safety and comfort of work environments. In addition, expecting branch

but before joining the company.

office employees and on-site workers to work with a sense of unity to proceed with construction

Dr. Naohito Horikawa
Industrial doctor

safely, the management gives encouragement to all employees including those from collaboratingcompanies.
President Nakamura patrolling the worksite (left)

41

METAWATER REPORT 2018

METAWATER REPORT 201842

S

SocialPartnership
Working through collaborations or partnerships with various stakeholders including local governments, local companies, and business partners
is essential to sustain water and environmental infrastructure. The METAWATER Group considers having a business partner to be the key forbusiness development and seeks to formulate and strengthen partnerships positively.

Collaborations with local companies in public-private partnership projects
With project operations becoming more comprehensive with wider-area services, working in collaboration with local companies and business
partners is becoming increasingly important. In response to expanding business territories, we seek to develop projects in collaboration withbusiness partners and companies rooted in local communities, thereby contributing to sustaining the water and environmental infrastructure.

Commendations to our business partners
The METAWATER Group holds an annual safety contest by inviting business partners
engaged in construction works to headquarters with the aim of improving safety
awareness. In FY2017, 115 companies participated in the contest and five companies,
which devoted their efforts especially for disaster prevention, were commended with aletter of appreciation from our President. At the safety contest, we hold a special lecture
inviting a specialist in safety, with the aim of further fostering safety awareness.
President Nakamura (right) awarding a letter of appreciation at
the safety contest

Municipal government A

Municipal government B

Contents

Storage

Big Data

Local governments andeducational institutions

Assumptions

IssuesCompany D

CSR purchasing

Our business partners/
companies

SolutionsCompany C

METAWATER’S ESG■ We‌ use ICT for collecting and using all data on water supply and sewerage facility projects consigned to us. We
share the data collected with the public and private sectors, as well as academic institutions, and this contributes tobuilding strong partnerships with them.

■ Promotion of transparent purchasing ~Total of 91 new business partners

View
Verifications

We post the “Inquiries about purchasing and dealings” form on the corporate website, and provide fair and equitable entry opportunities toall business partners. We launch new transactions with around 100 companies every year. The number of new corporate business partners in
FY2017 was 91.

■ Enhancing paperless operations through EDI* adoption
The METAWATER Group enhances implementation of EDI. Because operation under EDI enables

Promoting research and development through partnerships

environmental burdens to be reduced by achieving paperless management, as well as improving
the efficiency and accuracy of operations related to purchasing orders, we are promoting

The METAWATER Group, as a development-oriented company, develops a broad range of newtechnologies every year. In the water supply and sewerage areas, we aggressively carry out joint
research with universities and local governments. In particular, in the sewerage new technology
development project* implemented by the Ministry of Land, Infrastructure, Transport andTourism (MLIT), a number of our proposed technologies have been adopted and project studies
are being developed in collaboration with local governments and local companies nationwide.
Because joint work with partners is imperative for developing water infrastructure technologies,
we seek to further strengthen partnerships with central government, local governments,
universities, and local companies, and achieve successful outcomes from research.

implementation of EDI with the understanding and cooperation of business partners.
In FY2017, we launched the EDI operation process for purchased items relating to project
development and internal use, and about half of purchase orders were processed electronically.
This eliminated paper such as for order forms and invoices used previously, and paper
consumption declined by about 20,000 sheets a year. Like us, our counterparts have eliminatedinvoices and envelopes, achieving a paperless environment. We will expand the coverage

Paper that can be saved through the EDI process in one
purchase orderof transactions and applicable areas to adopt the EDI framework, aiming to further improve
Energy management system using intensive solid-liquid
separation technology

operating efficiency and reduce environmental burdens.
*EDI: The abbreviation of electronic data interchange, which is a framework supporting electronical business transactions*Innovative technology demonstration project on sewerage system sponsored by MLIT. The project is called the “B-DASH” Project.

■ Compliance with laws and regulations

Strengthening partnerships with electric switchboard manufacturing companies

We actively promote subscription to an insurance policy such as social insurance for construction workers. We thoroughly notify our business
partners, give guidance regarding demonstrating statutory welfare expenses in a quotation, and exchange opinions by individually visiting
people as necessary to ensure they take out social insurance.

In partnerships with companies that manufacture electric switchboards, we evaluate theirproducts with six evaluation criteria: quality in terms of performance, quality in terms ofdesign and documents, etc., cost; delivery time, point-earning items, and point-deducting
items. The evaluation results are disclosed to them. By doing so, we seek to facilitate
better communication with our business partners and continue to manufacture high-quality
switchboards.

■ Thorough employee education
We have conducted study sessions on the Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors (Subcontract Act)for all purchasing personnel to ensure thorough compliance with laws/regulations and to promote understanding. We also provide e-learning
courses to other employees and reinforce compliance education throughout the group.
Electric switchboards ready for shipment after plant inspection

43

METAWATER REPORT 2018

METAWATER REPORT 2018

44

G

GovernanceManagement organization(As of end of June 2018)

METAWATER S ESG

’

❻

❽
❾

Directors
1 President and Representative Director

Yasushi Nakamura

Auditors
5 Outside Director

Susumu Sakabe

❹

⓬

❿ ❺

⓫
❶

❷

❼

❸

Executive Officers

10 Audit and Supervisory Board Member

Masahiko Kato

Director of NGK INSULATORS, LTD. Senior Executive Officer

2 Director

Ichiro Fukushima

6 Outside Director

Motofumi Matsumura

11 Outside Auditor

Kimihiko Uemura

Advisor of Fuji Electric Co., Ltd.
Director of Fuji Furukawa Engineering & Construction Co., Ltd.
3 Director

Akira Kato

7 Outside Director

Keiichiro Sue

President & Chief Executive Officer

Senior Executive Officer

Senior Executive Officer

Senior Executive Officer

Senior Executive Officer

Executive Officer

Executive Officer

Operation execution control

Executive General Manager,
International Business Division

Assistance to the Chief Executive Officer
Executive General Manager, Corporate
Strategy Planning Division
Responsible for Corporate
Administration Department andAffiliates Coordination Department,
Corporate Strategy Planning Division
Executive General Manager,
Export Control Office

Executive General Manager,
Procurement Center

Executive General Manager,
Plant Engineering Division

Responsible for Safety and
Health Management Office

Responsible for Plant
Construction Center andQuality Assurance Office

Executive General Manager,
Service Solution Division
and Customer Engineering
Division,

Executive General Manager,
Public Private Partnership
Division

Yasushi Nakamura Ichiro Fukushima
Director and President,
METAWATER USA, INC.
Director and Chairman, AquaAerobic Systems, Inc.

12 Outside Auditor

Kazuo Takimoto

Partner of Blakemore & Mitsuki Law Firm
Outside Audit & Supervisory Member of NHK Spring Co., Ltd.
4 Director

Akira Nishio

Akira Kato

Akira Nishio

Noboru Okuda

Makoto Shimizu

Masashi Sakai

Service Solution Division
President and Representative
Director, METAWATER TECH
Co., Ltd.

8 Outside Director

Kaoru Aizawa
Independent Director of Nicca Chemical Co, Ltd.

9 Outside Director

Fumiko Kosao
Licensed tax accountant, Kosao Fumiko Accountant OfficeOutside Auditor of Tobishima Corporation
Outside Director of CTI Engineering Co., Ltd.

49

METAWATER REPORT 2018

Executive Officer

Executive Officer

Executive Officer

Executive Officer

Executive Officer

Executive Officer

Executive Officer

Executive General Manager,
CSR Promotion Office

President and Representative
Director, METAWATERSERVICE Co., Ltd.

Executive General Manager,
Business Strategy Division
Responsible for WBC Center

Depty Executive General Manager,
Corporate Strategy Planning Division
Executive General Manager, HR& General Affairs Planning Office,Corporate Strategy Planning Division

Deputy Executive General
Manager, Plant Engineering
Division

Executive General Manager,
Sales and Marketing Division

Executive General Manager,
Financial Planning Office, Corporate
Strategy Planning Division

Shigeru Hatsumata Eiji Nakamura

Kenji Yamaguchi

Michio Fujii

Responsible for Risk Management

Masao Tabata

Executive General Manager,
Product Center

Masahiro Takagi

Masayuki Nakagawa

Responsible for Information
Technology Planning Department,
Corporate Strategy Planning Division

METAWATER REPORT 2018

50

G

Governance
The METAWATER Group is strengthening the entire group’s risk management structure including information security. In addition, weare committed to promoting Business Continuation Management (BCM) as an entire group to continue business operations even in theevent of various unforeseen situations.

Corporate governanceCorporate governance organization

Basic concept of corporate governanceSo that we can grow sustainably with society, we are committed to improving our internal control based on our corporate mission. We are aiming
to be a group trusted by society through our continuous contribution to it while meeting the expectations of our stakeholders including customers,
local communities, shareholders and investors. To realize this aim, we are engaged in improving the following aspects of corporate governance.

METAWATER opts for an arrangement of a Board of Auditors as an organization design based on the Companies Act. The Board of Directors
makes important decisions related to management and supervises business execution. At the same time, auditors and the Board of Auditors
independent from the Board of Directors audit the status of directors’ execution of their duties and the like. Further, METAWATER has introduced
the Executive Officers System to accelerate management-related decision-making, reinforce functions to monitor business execution and clarity
responsibility. Further, the CSR Committee has been arranged as an organization to determine the important activities, systems, organizations,and the like of the Group to ensure compliance with regulatory requirements and corporate ethics. The position and role of each function are
mentioned below.

1. The Board of Directors and the Board of Auditors are arranged and independent directors are designated to reinforce the organization forsupervising our business with the purpose of creating corporate management with excellent reliability and transparency.

General meeting of shareholders Meeting

3. We disclose information in a fair, objective and appropriate manner and at an appropriate timing. Further, we communicate proactively with our
stakeholders.

Report/Submission

Appointment/
Dismissal/Approval

Report/submission

Board of Directors Meeting
Report/Submission

Audit
Supervision/Appointment/
Removal/Approval

President and Representative Director

As a basic policy of METAWATER Group based on the rules of the “Corporate Governance Code” (hereafter “CG Code”) stipulated by Tokyo Stock Exchange on June 1, 2015, the Group established the “Basic Policy on
Corporate Governance” (hereafter “CG Basic Policy”) on November 27, 2015, and disclosed the Policy on the corporate website.
http://www.metawater.co.jp/csr/responsiblity/pdf/governance.pdf

Report/Proposal

Appointment/
Dismissal/Approval

Appointment/
Dismissal

Board of Auditors Meeting

Accounting Auditor
Cooperation

ReportAuditing Office

ApprovalManagement Meeting

METAWATER’S ESG

2. Promotion of compliance and reinforcement of internal control functions are realized to establish an organization that can sustainably enhance
corporate value.

Internal audit
ReportApproaches to improve corporate governance

CSR Committee
1 Framework of directors●

Business divisions/Group companies

The majority of the Board of Directors members are outside directors now(5 out of 9 directors are outside directors)

We have five outside directors of nine directors to ensure management transparency andsoundness.
●

Board of Directors Meeting
The Board of Directors Meeting, held on a monthly basis and also as needed,
has a function to supervise management and decision-making. The Board of
Directors is comprised of nine members including five outside directors.
The status of business execution by directors including the representative
director is monitored by auditors, where three auditors attend the Board of
Directors Meeting basically and express their opinions whenever necessary.

One-third of the Board of Directors are independent directors (outside directors)(3 out of 9 directors are independent directors)

The METAWATER Group stipulates criteria for the independence of outside directors in
the Basic Policy on Corporate Governance. The number of outside directors satisfying thecriteria is three, and these directors were designated as independent directors together
with two outside auditors in the report to the Tokyo Stock Exchange.

A scene from the 45th ordinary general meeting of shareholders

2 Response to Corporate Governance CodeMETAWATER was listed on the First Section of theTokyo Stock Exchange Market in December 2014. As

November 2015

the CG Code was established in June 1, 2015, the group
implemented the measures stated on the right. We areJune 2016

committed to moving forward with corporate governance●

Established “Basic Policy on Corporate Governance”		

●Added one independent director (outside director)●

Disclosed evaluation on effectiveness of the Board of Directors*in compliance with CG Code (Rule 4-8)
*in compliance with CG Code (Rule 4-11-3)

also in future.
*Only (Supplementary Rule 4-2-1) is the Explain Item in the “Report on
Corporate Governance” (hereafter “CG report”) submitted on June 26, 2018.
The reason for non-implementation (Supplementary Rule 4-2-1) (from CG
Report)
The current remuneration for standing directors is comprised of fixed
remuneration based on their post and a bonus linked with the company’s
performance in the applicable business year. We will continue reviewing
the percentage of remuneration linked with mid-term or long-term
performance and the appropriate setting of percentage for cash and thecompany’s own stock as remuneration.

45

METAWATER REPORT 2018●

June 2017●

One independent director (outside director) was added
Held a meeting by independent outside director*in compliance with CG Code (Supplementary Rules 4-8-1 and 4-8-2)

Management Meeting
With the participation of standing directors and executive directors, theManagement Meeting is held twice a month basically. In the Management
Meeting, discussion and reporting are implemented on importantmanagement-related matters stipulated in our ofﬁcial competence rules.
The status of business execution by top management personnel including
the representative director is monitored by the standing auditors who attend
the Management Meeting. Further, they express their opinions whenevernecessary.

Board of Auditors Meeting
The Board of Auditors Meeting, held on a monthly basis and also as needed,
has a function to monitor management. The Board of Auditors is comprisedof three members including two outside auditors.
Auditors are designated from people with expertise and experience in ourbusiness as well as in legal and ﬁnancial affairs.
The Board of Auditors determines the audit policy, scope of work for each
auditor, and specific action plan and schedule, and it monitors the status ofbusiness execution by directors.
Executive Officers System
The Executive Officers System has been introduced to accelerate decisionmaking related to management, reinforce the function to supervise businessexecution and clarify accountability. The executive officers are comprised offourteen members including four directors and executive officers. Their termof office is one year and their appointment, reappointment and dismissal are
determined at the Board of Directors Meeting.

CSR Committee Meeting
The CSR Meeting is held two times a year. It functions to promotecompliance and reinforcement of internal control. It has eight subordinate
working groups. The CSR Committee Meeting is comprised of fourteen
members including one chairperson and thirteen committee members.
Details of the CSR Committee’s activities are reported to the Management
Meeting and the Board of Directors Meeting as needed.

METAWATER REPORT 2018

46

G

GovernanceCorporate governanceOutside Director’s roles

Interview with Outside Director

1 ‌Provide advice to promote the Company’s sustainable growth and improve medium- and long-term corporate value based on own knowledge
and insights, and supervise the execution of business by the Company
2 ‌As a position that is independent from the management, receive opinions from stakeholders including minority shareholders, and appropriatelyreflect those opinions at Board of Directors Meetings
3 ‌Appropriately manage risks including conflicts of interest arising from the execution of business by leveraging internal and external knowledge
and insights, as well as experience

I am committed to fulfilling my duties as an Outside Director
with a view to managing diversity and thinking flexibly,
while contributing to the growth of the business andimproving sustainability.
Fumiko Kosao Outside Director

Reasons for selection by individual

Motofumi
Matsumura

Kaoru
AizawaFumikoKosao

Kimihiko
UemuraKazuo
Takimoto

47

Mr. Sakabe held important positions at NGK INSULATORS LTD and has a wealth of management experience, as well as a depth ofexpertise in the areas of finance and accounting. Considering that he has the required skill set to supervise the execution of the businessof the Company by leveraging his management experience and expertise, we appointed him as an Outside Director of the Company.

The Board of Directors of the Company is composed of athe transparency of the management’s decision-making as wellmajority of Outside Directors, and corporate governanceas aggressively improving information disclosure are critical.

Mr. Matsumura held important positions at Fuji Electric Co., Ltd. and has a wealth of management experience and a depth ofknowledge in a broad range of business areas. Considering that he has the required skill set to supervise the execution of the businessof the Company by leveraging his management experience and expertise, we appointed him as an Outside Director of the Company.

functions effectively, supported by a structure that clearly

Aiming to achieve sustainable growth along with society,separates management supervision from business execution.

the METAWATER Group seeks to become a company that

With such a structure, the Board members conduct discussions

meets the expectations of stakeholders including employees,

positively while respecting the opinions of each other.

customers, business partners, shareholders, and investors in

They seriously and positively present questions andline with its corporate philosophy, is trusted by society andopinions from fresh perspectives, and try to respondcontinues to contribute to society.

promptly. In developing a business growth strategy, I see theWith the Board of Directors and the Board of Auditors in place

management’s firm commitment to adapting to a changing

and by appointing Independent Directors, the Company has

business environment, responding to social needs, andstrengthened its oversight structure for executing business

continuing to sustain society.

and ensured highly transparent and trustworthy management.

— What roles do you think are required of Outside
Directors?

— What do you think is necessary for the sustainablegrowth of corporate value?

Outside Directors are responsible for monitoring and

To improve corporate value, we need to optimize finances

supervising the management to ensure that the company’s

by raising profitability and improving the efficiency ofbusiness meets the expectations of shareholders and otherinvestments and asset utilization. In my view, the employees’

stakeholders in the medium and long term, advising theconsciousness is most critical for effective and efficientmanagement to support its corporate strategy and businessexecution to achieve optimization. I think the employees’

growth, and bringing knowledge from various industries toconsciousness, including their fulfillment and motivation,

create new corporate value.

which is at the core of an organization, needs to be transformed

The Outside Directors of the Company have had various

so that employees become motivated to pursue their work

careers and experience, and bring opinions with an objective

and improve business performance.

Outside Director

Outside Director

Outside Director

Keiichiro Suesustainable growth backed by that trust. At the foundations,Reasons for selection

Independent
Director

Outside Director
Independent
Director

Outside Director
Independent
Director

Outside Auditor
Independent
Director

Outside Auditor
Independent
Director

METAWATER REPORT 2018

Mr. Sue is a lawyer and is well versed in international legal affairs including international commercial relations. He
also held the position as an outside director of another company and has balanced and broad perspectives of industries
related to the Company. Although he has no direct management experience in a company, except as an outside director,
we consider him to have the required skill set to supervise the execution of the business of the Company by leveraging
his experience and expertise, and accordingly appointed him as an Outside Director of the Company.
Because he meets the standards set by the Company for Criteria for Independency of Outside Directors and also fulfills
the requirements of an Independent Director stipulated by the Tokyo Stock Exchange, we consider he does not havepotential conflicts of interest with general shareholders, and have designated him as an Independent Director.
Mr. Aizawa held important positions including Representative Director of Nitto Denko Corporation. He also hasa wealth of management experience gained through his position as an outside director of another company andpossesses balanced and broad perspectives of industries related to the Company. We consider that he has the required
skill set to supervise the execution of the business of the Company by leveraging his experience and extensive
knowledge. Accordingly, we appointed him as an Outside Director.
Because he meets the standards set by the Company for Criteria for Independency of Outside Directors and fulfills therequirements of an Independent Director stipulated by the Tokyo Stock Exchange, we consider that he does not havepotential conflicts of interest with general shareholders, and have designated him as an Independent Director.
Ms. Kosao is well versed in corporate accounting with expertise in the area of taxation and has broad perspectives gained
through her position as an outside director of another company. Although she has no direct management experience in a company,
except as an outside director, we consider that she has the required skill set to supervise the execution of the business of theCompany by leveraging her experience and expertise. Accordingly, we appointed her as an Outside Director of the Company.
Because she meets the standards set by the Company for Criteria for Independency of Outside Directors and fulfills therequirements of an Independent Director stipulated by the Tokyo Stock Exchange, we consider that she does not have potential
conflicts of interest with general shareholders, and have designated her as an Independent Director.
Mr. Uemura is a lawyer and is well-versed in corporate legal affairs including the Companies Act. With a wealth of experience
gained through his position as an outside director of another corporation, he has balanced and broad perspectives of industries
related to the Company. We consider that he has the required skill set to supervise the execution of the business of the Company
by leveraging his experience and high level of independence, and accordingly appointed him as an Outside Auditor of the Company.
Because he meets the standards set by the Company for Criteria for Independency of Outside Directors and fulfills therequirements of an Independent Director stipulated by the Tokyo Stock Exchange, we consider that he does not have potential
conflicts of interest with general shareholders, and designated him as an Independent Director.
Mr. Takimoto is well versed in corporate taxation as a certified public accountant and tax accountant. With a wealth ofexperience gained from his position as an outside director of another company, he has balanced and broad perspectivesof industries related to the Company. We consider that he has the required skill set to supervise the execution of
the business of the Company by leveraging his extensive experience of finance and accounting and high level of
independence, and accordingly appointed him as an Outside Auditor of the Company.
Because he meets the standards set by the Company for Criteria for Independency of Outside Directors and fulfills
the requirements of an Independent Director stipulated by the Tokyo Stock Exchange, we consider he does not havepotential conflicts of interest with general shareholders, and designated him as an Independent Director.

strengthening corporate governance is essential and assuring
METAWATER’S ESG

SusumuSakabe— It has been one year since you took the position of
Outside Director. Would you share your feelings with us?

Corporate title

perspective that is independent of the Company. I would
diversity, with a fresh perspective and new ways of thinking— Finally, would you tell us about your aspirations
for the future?

based on my past experience, and contribute to further

Outside Directors have the duties of both supervision andimproving corporate governance.

providing advice. With an external and objective standpoint,

like to bring my candid opinions in the context of managing

as well as my own experience and knowledge, I will continue— What do you think would be necessary for the
corporate governance of the Company?

to bring my diversity-oriented views and thinking, and try

To continue to contribute to society, it is important forand improving sustainability through the Board of Directors

a company to obtain the trust of society and ensure its

Meetings.

to contribute to both business growth through innovation

METAWATER REPORT 201848

G

GovernanceRisk Management

Activities for information security

With the “METAWATER Group Risk Management Rules” in place, the METAWATER Group has a systematic awareness of various risks that
can affect the Group’s operations, evaluates and manages those risks appropriately, and thereby seeks to prevent their occurrence or to reduce
losses associated with them, while striving to improve and expand the corporate value of the Group.
Furthermore, the Risk Management Working Group has been established within the CSR Committee in an effort to improve and reinforce thecorporate framework so that the Group can appropriately address individual risks in order to meet stakeholders’ expectations.

While advanced information and communications technology (ICT) leads to improvements in productivity and innovations in business
operations, it exposes a company to risks such as leaks of classified data and personal information and cyberattacks, so prompt and appropriate
countermeasures are imperative. The METAWATER Group is working on various activities as countermeasures for such risks.
1 Upgrading
security countermeasures at construction‌and plant operation sites
The METAWATER Group carries out an IT internal audit of construction sites and water

Board of Directors Meeting

Supervision

treatment and sewerage treatment plant operation sites, while strengthening information

Management Meeting

ReportInstruction
Supervision

security in offices. We verified the status of the five minor improvement opportunities in theaudit of October 2017, and all cases were resolved.

ReportCSR Committee
Information security is imperative at construction sites

Risk Management Sub-Committee
Instruction

Auditing Office

Audit

ReportDivisions/Group companies

2 Expanding
groupware functions and group seminars‌
We are also working to expand groupware functions because operating efficiency is
considered to be essential for improving information security. Operating efficiency
has significantly improved with the availability of more functional tools for schedulemanagement, information sharing, etc. We also make efforts to raise employees’ awareness

METAWATER’S ESG

Reportof information security, in addition to providing education on additional functions.

Besides, to further address individual risks, we have stipulated “Group Emergency Procedures,” “Compliance Rules,” “Information Security
Policies,” rules and standards to address accidents and environment/safety and hygiene issues, manuals, and so forth. As a result, we haveestablished a system that enables prompt and appropriate responses to be taken in the event of various contingencies.

In FY2017, 148 employees comprising new graduates, mid-career workers, and otherapplicants across the Group participated in information seminars.

Information security seminar for new graduates

3 Implementationof security measures accompanying‌work-style reforms

BCM activities

We have developed security measures due to increasing tele-work and operations outside
offices, resulting from the promotion of work-style reforms. We have adopted the remote

With a commitment to strengthening the Business Continuation Management (BCM),
the METAWATER Group has developed the Business Continuation Plan (BCP) that issuitable for its business characteristics.
Furthermore, the Group holds a BCM Promotion Working Group meeting once amonth, in order to improve the effectiveness of the BCP developed.
In FY2017, the BCM focused on initial responses, in particular, those in the IT Divisionand the Procurement Division were reinforced.
In addition, we carried out technical skill training targeting the Self-defense Firefighting Team at headquarters, as initial responses at offices in the event of an
emergency situation that would help improve the effectiveness of the BCP. A total of
about 70 Self-defense Fire-fighters assigned to respective floors participated in the
training and acquired various technical skills related to making emergency reports,
performing cardiopulmonary resuscitation, using fire extinguishers, etc. This Selfdefense Fire-fighting training is planned to be implemented at operating bases otherthan the headquarters.

access tool, MagicConnect for tele-work, which assures security and enables operations to
be conducted in the same way as in an office.

MagicConnect

BCM Promotion Working GroupInterview with staff in charge
I am responsible for planning and developing company-wide information security measures and operations at the Personal Information Protection/
Information Security Promotion Office. Collecting information is imperative because cyberattacks are getting more and more malicious every day. I
have to be constantly alerted to such information, but feel responsible and fulfilled with the important role of protecting the Company’s credibility.
Responsible staff of IT Division

Technical skill training for Self-defense Fire-fighters

51

METAWATER REPORT 2018

METAWATER REPORT 2018

52

G

GovernanceCompliance
The METAWATER Group believes that sincerely ensuring compliance and social credibility by directors and all employees will lead to sustainablecorporate growth. With the Corporate Charter of Conduct, the Employees’ Code of Conduct, and the compliance rules in place, we have
implemented various initiatives and internal regulations to take concrete actions, assuring thorough compliance with regulatory rules andinternal rules.

Compliance Working GroupAs a specialized working group under the CSR Committee, we have established the Compliance Working Group composed of five department
chief managers and the Legal Division as the secretariat. The Working Group is engaged in activities that include following up implementation ofcompliance programs, and studying and developing company-wide compliance education and compliance measures, as well as consultation on
issues received from the compliance helpline.
In response to these matters, we hold emergency and temporary meetings in addition to regular quarterly meetings.

Financial
Information
財務情報セクション

Compliance Education

55
55

Financial
財務報告Highlights

The METAWATER Group provides lecture-based compliance learning courses,
including company-wide education provided at various bases throughout the country,
company-wide e-learning, executive education, and education by job grade. Over thetwo years from FY2016 to FY2017, we have provided company-wide education at
various bases throughout the country with the themes of internal control, J – SOX,
and timely disclosure.
The aim of selecting these themes is to reaffirm the significance and mechanism ofinternal controls and J-SOX, based on an even greater involvement with shareholders
and other stakeholders following our listing in FY2014. It is also important tofamiliarize employees with information disclosure methods of the company as thenext step after having a round of education on preventing insider trading provided at
the time of listing.
Company-wide education was provided primarily to administrative executives, a totalof 26 times at nine locations over two years. A total of 821 employees participatedand all targeted administrative executives completed the education.

57
59

Consolidated
Balance Sheets
連結貸借対照表

5961

Consolidated
Statement of Income and Statement of Comprehensive Income
連結損益計算書および連結包括利益計算書

61
63

Consolidated
Statement of Changes in Net Assets
連結株主資本など変動計算書

63
66

Consolidated
Statement of Cash Flows
連結キャッシュ・フロー計算書

65
68

Notes
to the Consolidated Financial Statements
連結財務諸表に関する注記事項

Compliance seminar at headquarters■ Implementation of company-wide education
FY2016
Headquarters (6 times), Hino (2), Sapporo (1),
Achievements Sendai (1), Chita (1), Nagoya (1)FY2017
Headquarters (3 times), Nagoya (3), Osaka (6),
Achievements Hiroshima (1), Fukuoka (1)We have scheduled company-wide education with the themes ofprotecting personal information and preventing harassment in FY2018
and FY2019.

Compliance awareness survey
The METAWATER Group has steadily formulated a compliance system and framework, including establishment of internal rules, continuous
implementation of compliance education, and establishment of a helpline. Within society, however, there are still many corporate incidents thatlead to social issues, and some comments point out that such problems occur mainly due to problems of corporate culture and decision-making
processes. Given this situation, in a bid to identify any potential issues within the Group which may cause a corporate incident, we conducted
a compliance awareness survey targeting all executive officers and employees, except directors, by commissioning Nippon Omni-Management
Association (NOMA) Research Institute in November 2017, and received responses from 3,614 participants from throughout the group.
The METAWATER Group will examine and analyze the results of this survey, study further countermeasures, and implement them to solidify its
compliance management.

53

METAWATER REPORT 2018

Financial Highlights

Analysis on Operating Results
Descriptions and statements in relation to forward-looking projections disclosed in this document reflect the judgment of
the Group as of March 31, 2018.

Net sales(Millions of yen)

Plant Engineering Business

1,200

Service Solutions Business

Operating income(Millions of yen)

Plant Engineering Business
Service Solutions Business

80

1,000
60

Operating results by segment are as follows:(Plant Engineering Business)
For the Plant Engineering Business, net sales amounted to ¥64,965 million (2.7% decrease year to year), due to sluggish
growth in domestic EPC business resulting from an increase in large-scale long-term projects and extension of completion
date of construction caused by delays in civil engineering work and construction work, which was offset by a steady growthin overseas businesses. By contrast, operating income amounted to ¥2,623 million (56.6% increase year to year) due to costsaving initiatives. Outstanding order was ¥69,907 million (11.9% increase year to year).
(Service Solutions Business)
For the Service Solutions Business, net sales amounted to ¥45,930 million (2.3% increase year to year) due to a steady
growth in PPP and O&M businesses. By contrast, operating income amounted to ¥4,121 million (11.4% decrease year toyear) due to varied composition of projects. Outstanding order was ¥61,681 million (7.9% increase year to year).

800

668

650

26

47

41

40

600
400

20
200

17

449

459

2017.32018.3002017.32018.3Financial Position Review for the Current Fiscal Year
Total assets as of March 31, 2018 increased by ¥2,030 million compared to March 31, 2017 to ¥122,991 million. Current
assets increased by ¥3,313 million compared to March 31, 2017 to ¥106,894 million due to an increase in cash and deposits
and notes and accounts receivable - trade, offset with a decrease in work in process and supplies.
Non-current assets decreased by ¥1,282 million compared to March 31, 2017 to ¥16,097 million due to a decrease ingoodwill and customer-related assets.
Current liabilities increased by ¥512 million compared to March 31, 2017 to ¥49,042 million due to an increase in advances
received, offset with a decrease in accounts payable - trade.
Non-current liabilities decreased by ¥1,263 million compared to March 31, 2017 to ¥18,906 million due to a decrease in PFI
and other project finance loans.
Total net assets increased by ¥2,782 million compared to March 31, 2017 to ¥55,042 million due to recognition of profit
attributable to owners of parent and payment of dividends.
Cash Flow Review
The balance of cash and cash equivalents (hereinafter the “funds”) as of March 31, 2018 increased by ¥1,625 million
compared to March 31, 2017 to ¥24,977 million. An analysis of the cash flows for the fiscal year ended March 31, 2018 andrelated commentary thereon are presented below:(Cash flows from operating activities)
The funds generated by operating activities was ¥5,175 million (¥2,594 million decrease year to year): ¥6,465 million ofincome before income taxes, ¥2,067 million increase in advances received and ¥1,441 million of depreciation, offset with
¥4,311 million increase in notes and accounts receivable - trade and ¥2,394 million used for payment of income taxes.

Financial Information

Operating Results Review for the Current Fiscal Year
During the fiscal year ended March 31, 2018, business conditions of the Japanese economy have recovered moderately.
This is reflected in an improving labor market and increases in salary levels brought about as a result of the implementation of
the economic and monetary policy set out by the Government. In terms of the world economy, despite concern about impact
of political climate in Europe and uncertainty of the United States administration, moderate economic recovery has beenachieved.
The domestic business environment in which the Group operates has continued to face challenges including a downward
trend in the level of public spending, a sharp increase in labor costs arising from shortage of human resources, and somedelays in civil engineering projects and construction work.
Consequently, following the principles set out in the “Midterm business plan (from the fiscal year ended March 31, 2016 to
fiscal year ended March 31, 2018)”, the Group continued to focus on reinforcing our core businesses: domestic EPC andO&M businesses and expanding our growing businesses: PPP and overseas businesses throughout the current fiscal year,
aiming to be a “company that acts in advance of changes and continues to grow”.
In the domestic businesses, as there are increasing public-private partnership arrangements and use of private sectors toaddress local governments’ financial difficulties and human resources issues, the Group has continued to make efforts for
improvement of earnings as realized in strategic alliances with partner companies, development and expansion of
distinguished technologies and products, the Company-wide streamlining of operations and cost saving initiatives.
In the overseas businesses, the Group sought to accelerate business developments centered around Europe and the UnitedStates, where stable market growth is expected. As part of it, the Group has sought to achieve further business expansion
especially through Aqua-Aerobic Systems, Inc., the subsidiary located in the United States, as our business base.
For the operating results of the Group for the fiscal year ended March 31, 2018, net sales was ¥110,895 million (0.7%
decrease year to year), operating income was ¥6,745 million (6.6% increase year to year), ordinary income was ¥6,465
million (3.4% increase year to year) and profit attributable to owners of parent was ¥3,931 million (17.1% decrease year toyear). Profit attributable to owners of parent decreased as favorable movement of tax-effect accounting was recorded at thesubsidiary in the United States for the fiscal year ended March 31, 2017.
As a result of orders of large-scale projects of PPP business, sales orders for the fiscal year ended March 31, 2018 reached arecord high of ¥131,589 million (10.0% increase year to year), of which ¥135,886 million (18.0% increase year to year) wasoutstanding as of March 31, 2018.

(Cash flows from investing activities)
The funds used for investing activities was ¥868 million (¥663 million decrease year to year): ¥527 million used for purchaseof property, plant and equipment and ¥217 million used for purchase of intangible assets.
(Cash flows from financing activities)
The funds used for financing activities was ¥2,619 million (¥78 million decrease year to year): ¥1,503 million used for
payment of dividends and ¥825 million used for repayments of PFI and other project finance loans.
Issues to be Addressed
In the Group’s main business in the domestic water and sewage treatment market, the financial difficulties of local
governments and shortage of engineers have become evident, which are attributable to the population decline. In addition,measures for facilities and equipment developed during the period of economic growth in Japan, which are now aging, as wellas large earthquakes and sudden heavy rains are urgent issues. Under these circumstances, the establishment and revisions of
the PFI Act and new government policies, etc. are fueling the acceleration of public-private partnerships using private funds,
technology and know-how in public infrastructure development as well as expansion in coverage area of water and sewage
business operators to strengthen their business operations both in management and technology. Further utilization of privatecompanies is expected in the future.

55

METAWATER REPORT 2018

METAWATER REPORT 201856

On the other hand, the issues faced by the overseas water and sewage market are divided. Europe and the United States are
the main drivers of countermeasures against aging facilities and equipment and the tightening of environmental regulations,while areas including emerging Asian countries have the pressing issue of developing a new water and sewage infrastructure.
With the backing of governments and local governments, we expect the further international development of technology andknow-how related to water and sewage system development in the future.
These market conditions prevented the Group from attaining the numerical targets of the Midterm business plan covering theperiod up to FY2017, originally formulated in May 2015. Main factors were an increase in long-term projects and a lack of humanresources for civil engineering and construction work requiring the sales reporting period to be postponed. However, thanks toorders of large-scale projects in the PPP business, record-high sales orders were achieved. In addition, outstanding orders as ofMarch 31, 2018 have grown steadily, as a result of factors such as the increasing scale and longer terms of projects.
In light of this business environment, the Group has developed the Midterm business plan 2020, covering the period up to
FY2020, as the first stage in achieving its long-term vision (ten-year-vision), with the priority measures of “strategic
development investments”, “business strategy”, and “ongoing ESG initiatives”. The entire Company will work together to achieve
the management targets for FY2020 of sales orders of ¥140.0 billion, net sales of ¥128.0 billion, and operating income of ¥9.0
billion.
The Company’s Management Policy, Management Environment, Medium- to Long-Term Business Strategy and Issues to be Addressed, etc.
Descriptions and statements in relation to forward-looking projections disclosed in this document reflect the judgment of theGroup as of March 31, 2018.

(iii) Ongoing ESG initiatives
In addition to social contributions through business activities with a high level of contribution to the environment, we will also
work actively to reduce our environmental footprint and engage in regional contribution activities as a corporate citizen, andcontribute to the Sustainable Development Goals (SDGs) advocated by the United Nations. In terms of corporate governance,
we will work to strengthen and further streamline our management structure, and actively engage in dialogue withstakeholders as we aim for a highly reliable and transparent management.
Note:
1. PFI Act: Act to promote the development of public facilities through the use of private funds, etc.
2. PPP (Public-Private Partnership): the means for the private sector to participate in providing services to the public
3. Concession: the method to grant private enterprises the right to operate public infrastructure for a long term withouttransfer of ownership of facilities
4. EPC: Engineering, Procurement and Construction
5. O&M: Operation and Maintenance

Financial Information

In the Group’s main business in the domestic water and sewage treatment market, the financial difficulties of local
governments and shortage of engineers have become evident, which are attributable to the population decline. In addition,measures for facilities and equipment developed during the period of economic growth in Japan, which are now aging, as wellas large earthquakes and sudden heavy rains are urgent issues. Under these circumstances, the establishment and revisions of
the PFI Act (Note 1) and new government policies, etc. are fueling the acceleration of public-private partnerships using private
funds, technology and know-how in public infrastructure development as well as expansion in coverage area of water andsewage business operators to strengthen their business operations both in management and technology. Further utilization ofprivate companies is expected in the future.
On the other hand, the issues faced by the overseas water and sewage market are divided. Europe and the United States are
the main drivers of countermeasures against aging facilities and equipment and the tightening of environmental regulations,while areas including emerging Asian countries have the pressing issue of developing a new water and sewage infrastructure.
With the backing of governments and local governments, we expect the further international development of technology andknow-how related to water and sewage system development in the future.
These market conditions prevented the Group from attaining the numerical targets of the Midterm business plan covering theperiod up to FY2017, originally formulated in May 2015 (the “previous Midterm business plan”). Main factors were an increase inlong-term projects and a lack of human resources for civil engineering and construction work requiring the sales reporting
period to be postponed. However, thanks to orders of large-scale projects in the PPP (Note 2) business, record-high sales
orders were achieved. In addition, outstanding orders as of March 31, 2018 have grown steadily, as a result of factors such as
the increasing scale and longer terms of projects.
In light of this business environment, the Group has developed the Midterm business plan 2020, covering the period up to
FY2020, as the first stage in achieving its long-term vision (ten-year-vision), with the priority measures of “(i) strategic
development investments”, “(ii) business strategy”, and “(iii) ongoing ESG initiatives”. The entire Company will work together toachieve the management targets for FY2020 of sales orders of \140.0 billion, sales of \128.0 billion, and operating income of\9.0 billion.

(Core businesses)
In the EPC business, we will strengthen our engineering structure and cost competitiveness mainly through the use of IT tocapture future renewal demand, and work to further enhance profitability. In the O&M business, we will aim for stable growthof the business through the use of stock pump stations and maintenance and management know-how.
(Growing businesses)
In the PPP business, we will expand the scope of our business through a regional strategy that leverages our pastachievements, and strengthen our business structure for further concessions. In the overseas businesses, we will position
Europe and the United States as strategic areas, where continued stable market growth is expected, and work to achieve
further business expansion through Aqua-Aerobic Systems, Inc., the subsidiary located in the United States, as our businessbase.

(i) Strategic development investments
As major changes in the environment are expected over the next decade, including an increase in long-term projects,
particularly comprehensive projects, and the emergence of expanded coverage projects as typified by concession (Note 3), we
will add “strategic development investments” to the conventional in order to conduct the development of products, solutions
and new businesses that will be essential for medium- to long-term growth.
(ii) Business strategy
Following the previous Midterm business plan, the Group will continue to strengthen and expand its business with the EPC(Note 4) and O&M (Note 5) businesses positioned as core businesses, and the PPP and overseas businesses positioned as
growing businesses.

57

METAWATER REPORT 2018

METAWATER REPORT 201858

Consolidated Balance Sheets

Thousands of
U.S. dollars

Millions of yen
As of March 31,
2017

As of March 31,
2018

As of March 31,
2018

Assets

As of March 31,
2017

As of March 31,
2018

As of March 31,
2018

Liabilities

Current assets
Cash and deposits
Notes and accounts receivable - trade

Current liabilities*3, *4

24,230*3, *425,805

242,893

Notes and accounts payable - trade

20,037

18,372

172,929*3

67,946*3

72,164679,254

Electronically recorded obligations

7,637

8,155

76,760

284

269

2,532

833

7,840

Work in process

3,119

2,623

24,689

Short-term loans payable

Supplies

4,127

3,299

31,052Current portion of PFI and other projects finance loans*3

Deferred tax assets - current

1,582

1,492

14,043

Income taxes payable

2,367

2,173

20,453

1,508

14,194

Advances received

8,672

10,719100,894

106,894

1,006,155

Provision for warranties for completed construction

1,063

857

8,066

Provision for loss on construction contracts

167

204

1,920

Other current liabilities

7,474

7,456

70,180Total current liabilities

48,53049,042

461,615

2,050

19,295

11,549108,706

5,350

5,294

49,8302,572

Other current assets*4

Total current assets

103,580*4Non-current assets
Property, plant and equipment

825

*3

Buildings and structures, net

1,244

1,189

11,191

Machinery and equipment, net

1,064

818

7,699

Tools, furniture and fixtures, net

444

423

3,981

Long-term loans payable

Construction in progress

12

235

2,211

PFI and other projects finance loans

Other property, plant and equipment, net

292

315

2,964

Liability for retirement benefit

2,982

28,068Other non-current liabilities

—

11

103

Total non-current liabilities

20,17018,906

177,955

68,70067,949639,580

Total property, plant and equipment

*2

3,059

*2

Intangible assets
SoftwareNon-current liabilities
2,436
*3

12,382

*3

890

8,377

88

94

884

Goodwill

2,045

1,842

17,338

Shareholders’ equity

Customer-related assets

3,044

2,769

26,063

Capital stock

11,946

11,946112,443

Other intangible assets

1,708

1,463

13,770Capital surplus

15,08015,080141,942

Total intangible assets

8,160

7,060

66,453Retained earnings

27,78730,214284,393

(0)

(0)

(0)

54,81457,241

538,789

Valuation difference on available-for-sale securities

32

54

508

Investments and other assets
Investment securities

Total liabilities
Net assets

Treasury stock*1, *4

1,204
251*1, *4

1,345

12,660224

2,108

Total shareholders’ equity

Long-term loans receivable*4

Guarantee deposits

1,407

1,528

14,382

Assets for retirement benefits

756

821

7,727

Foreign currency translation adjustment

133

84

790

Deferred tax assets - non-current

2,513

2,087

19,644Remeasurements of defined benefit plans(2,838)(2,474)(23,286)

26

47

442

Total accumulated other comprehensive income(2,671)(2,335)(21,978)

6,160

6,055

56,993

Non-controlling interests

117

136

1,280

17,38016,097

151,515

Total net assets

52,26055,042

518,091

120,961

122,991

1,157,671

120,961

122,991

1,157,671

Other non-current assets
Total investments and other assets
Total non-current assets
Total assets

METAWATER REPORT 2018

*4

Financial Information

1,272

Software in progress

59

Thousands of
U.S. dollars

Millions of yen

Accumulated other comprehensive income

Total liabilities and net assets

METAWATER REPORT 201860

Consolidated Statement of Income and Statement of Comprehensive Income[Consolidated Statement of Income][Consolidated Statement of Comprehensive Income]Thousands of
U.S. dollars

Millions of yen
Fiscal year ended
March 31, 2017
Net sales
Cost of sales

111,688*1

Gross profit
Selling, general and administrative expenses
Operating income

Fiscal year ended
March 31, 201888,21617,142
6,328

Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2018

4,753

3,951

37,189921

197

86,925818,194

23,970225,621

Valuation difference on available-for-sale securities

17,224

162,123

Foreign currency translation adjustment

(329)

(49)

(461)

6,745

63,488Remeasurements of defined benefit plans

1,170

364

3,426

336

3,162

5,603

4,287

40,352

5,592

4,267

40,163

11

20

188

*2, *4Non-operating income:

Other comprehensive income

Total other comprehensive income

Interest income

205

193

1,816

Dividends income

41

34

320

Miscellaneous income

4

17

160

251

245

2,306

218

217

2,042

66

621

Total non-operating income

Fiscal year ended
March 31, 2018

1,043,815*1

ProfitFiscal year ended
March 31, 2017

110,895

23,471*2, *4

Thousands of
U.S. dollars

Millions of yen

Comprehensive income

*1

849

*1

(Details)
Comprehensive income attributable to owners of parent
Comprehensive income attributable tonon-controlling interests

Non-operating expenses:
Interest expenses
Loss on disposal of non-current assets

*3

83

*3

26

236

2,221

Miscellaneous loss

0

4

37

329

526

4,951

6,251

6,465

60,852

Loss on valuation of investment securities

40

—

—

Total extraordinary loss

40

—

—

Profit before income taxes

6,210

6,465

60,852

Income taxes - current

2,410

2,187

20,585

Income taxes - deferred

(954)

325

3,059

Total income taxes

1,456

2,513

23,653

Profit

4,753

3,951

37,189

11

20

188

4,742

3,931

37,001

Total non-operating expenses
Ordinary income

Financial Information

Foreign exchange loss

Extraordinary loss

Profit attributable to non-controlling interests
Profit attributable to owners of parent

61

METAWATER REPORT 2018

METAWATER REPORT 201862

Consolidated Statement of Changes in Net Assets

Fiscal year ended March 31, 2017

Fiscal year ended March 31, 2018
(Millions of yen)

(Millions of yen)

Shareholders’ equity

Balance at April 1, 2016

Shareholders’ equity

Capital stock

CapitalsurplusRetainedearnings

Treasurystock

11,94615,08024,548—

Total
shareholders’equity51,575

Balance at April 1, 2017

Changes during the year

Capital stock

CapitalsurplusRetainedearnings

Treasurystock

11,94615,08027,787(0)54,814

Changes during the year

Dividends from surplus(1,503)(1,503)

Dividends from surplus(1,503)(1,503)

Profit attributable to ownersof parent

4,742

4,742

Profit attributable to ownersof parent

3,931

3,931

(0)

Purchase of treasury stock

Purchase of treasury stock(0)

Changes in other equity, net
Total changes during the year
Balance at March 31, 2017

—

—

3,239

(0)

3,238

Total changes during the year

11,94615,08027,787(0)54,814

Balance at March 31, 2018

(0)

—

—

2,427

(0)

2,427

11,94615,08030,214(0)57,241

Accumulated other comprehensive income

Total
Valuation
Foreign currency Remeasurements accumulateddifference onof definedothertranslation
available-for-salebenefit planscomprehensive
adjustment
securities
incomeBalance at April 1, 2016

(0)

Changes in other equity, net

Accumulated other comprehensive income

23

463

(4,008)(3,521)

Noncontrollinginterests

Total net
assets108

48,161

Changes during the year

Total
Valuation
Foreign currency Remeasurements accumulateddifference onof definedothertranslation
available-for-salebenefit planscomprehensive
adjustment
securities
incomeBalance at April 1, 2017

32

133

(2,838)(2,671)

Noncontrollinginterests

Total net
assets117

52,260Changes during the year

Dividends from surplus(1,503)

Dividends from surplus(1,503)

Profit attributable to ownersof parent

4,742

Profit attributable to ownersof parent

3,931

Purchase of treasury stock(0)

Purchase of treasury stock(0)

Changes in other equity, net

9

(329)

1,170

849

9

859

Changes in other equity, net

21

(49)

364

336

18

354

Total changes during the year

9

(329)

1,170

849

9

4,098

Total changes during the year

21

(49)

364

336

18

2,782

Balance at March 31, 2017

32

133

(2,838)(2,671)

117

52,260

Balance at March 31, 2018

54

84

(2,474)(2,335)

136

55,042METAWATER REPORT 2018

METAWATER REPORT 2018

Financial Information

63

Total
shareholders’equity64

Consolidated Statement of Cash Flows

Fiscal year ended
March 31, 2017

Shareholders’ equity

Balance at April 1, 2017

Capital stock

CapitalsurplusRetainedearnings

Treasurystock

112,443

141,942

261,549(0)515,945

Changes during the year
(14,147)(14,147)

Profit attributable to ownersof parent

37,00137,001

Purchase of treasury stock(0)

Balance at March 31, 2018

(0)

6,210

6,465

60,852

Depreciation

1,099

1,441

13,563

Amortization of goodwill

136

140

1,317

Increase/(decrease) in liabilities for retirement benefits

(120)

(349)

(3,285)(Increase)/decrease in assets for retirement benefits

100

68

640

213

(194)

(1,826)

69

37

348

Interest income and dividends income

(247)

(228)

(2,146)—

22,844(0)

22,844

Interest expenses

218

217

2,042

112,443

141,942284,393(0)538,789

Foreign exchange (gain)/loss

61

209

1,967

Loss on disposal of property, plant and equipment

88

66

621

(Increase)/decrease in notes and accounts receivable - trade

2,745(4,311)(40,577)(Increase)/decrease in inventory

(432)

1,292

12,161

Increase/(decrease) in notes and accounts payable - trade(4,292)(858)(8,076)

Increase/(decrease) in advances received

2,845

2,067

19,455

Other cash flows from operating activities

1,196

1,496

14,081

Subtotal

9,892

7,562

71,178Interest and dividends income received

247

228

2,146

Interest expenses paid

(224)

(220)

(2,070)

Income taxes paid

(2,145)(2,394)(22,533)

Net cash provided by operating activities

7,769

5,175

48,710Net (increase)/decrease in time deposits

47

50

470

Purchase of property, plant and equipment

(474)

(527)

(4,960)Purchase of intangible assets

(261)

(217)

(2,042)

Purchase of investment securities

(69)

(110)

(1,035)

Proceeds from sale of investment securities

5

—

—

Acquisition of newly consolidated subsidiary

(789)

—

—

Payments of loans receivable

(17)

(1)

(9)

Collection of loans receivable

27

28

263

Other

0

(91)

(856)

(1,531)(868)(8,170)

Total
Valuation
Foreign currency Remeasurements accumulateddifference onof definedothertranslation
available-for-salebenefit planscomprehensive
adjustment
securities
income301

1,251(26,713)(25,141)

Noncontrollinginterests

1,101

Total net
assets491,905

Changes during the year
Dividends from surplus(14,147)

Profit attributable to ownersof parent

37,001

Purchase of treasury stock(0)

Changes in other equity, net

197

(461)

3,426

3,162

169

3,332

Total changes during the year

197

(461)

3,426

3,162

169

26,185

Balance at March 31, 2018

508

790

(23,286)(21,978)

1,280

518,091

Cash flows from investing activities

Net cash used in investing activities

65

METAWATER REPORT 2018

METAWATER REPORT 2018

Financial Information—

Accumulated other comprehensive income

Balance at April 1, 2017

Fiscal year ended
March 31, 2018

Profit before income taxes

Increase/(decrease) in provision for warranties for completed
construction
Increase/(decrease) in provision for loss on
construction contracts

Changes in other equity, net
Total changes during the year

Fiscal year ended
March 31, 2018

Cash flows from operating activities

Total
shareholders’equityDividends from surplus

Thousands of
U.S. dollars

Millions of yen(Thousands of U.S. dollars)

66

[Notes to Consolidated Financial Statements](Basis of Presentation)
The accompanying consolidated financial statements of METAWATER Co., Ltd. (the “Company”) and consolidated subsidiaries are prepared on the basisof accounting principles generally accepted in Japan, which are different in certain respects as to the application and disclosure requirements ofThousands of
U.S. dollars

Millions of yen
Fiscal year ended
March 31, 2017

Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2018

International Financial Reporting Standards, and are compiled from the consolidated financial statements prepared by the Company as required by the
Financial Instruments and Exchange Act of Japan.
Certain amounts in the prior year’s financial statements have been reclassified to conform to the current year’s presentation.

Cash flows from financing activities
Proceeds from short-term loans payable

—

452

4,254

(Presentation of Amounts in the Consolidated Financial Statements)

Repayments of short-term loans payable

(372)

(740)

(6,965)The yen amounts are truncated at millions and U.S. dollar amounts are rounded off in thousands. The total Japanese yen and U.S. dollar amounts shown

Repayments of PFI and other projects finance loans

(819)

(825)

(7,765)in the financial statements do not necessarily agree with the sum of the individual amounts. U.S. dollar amounts presented in the financial statements

(0)

(0)

(0)

(1,503)(1,503)(14,147)

(1)

(1)

(9)

Purchase of treasury stock
Cash dividends paid
Cash dividends paid to non-controlling interests
Net cash used in financing activities

are included solely for convenience. The rate of \106.24 to US$1.00, prevailing on March 31, 2018, has been used for translation into U.S. dollar amounts
in the financial statements. The inclusion of such amounts should not be construed as a representation that Japanese yen amounts have been or could in
the future be converted into U.S. dollars at that or any other rate.

(2,697)(2,619)(24,651)

Effect of exchange rate change on cash and cash
equivalents

(185)

(63)

(592)

Net increase/(decrease) in cash and cash equivalents

3,355

1,625

15,295by the Company.

Cash and cash equivalents at April 1

19,99723,352219,804

Investments in companies over which the Company exercises significant influence in terms of their operating and financial policies have been accounted

24,977

235,099

Cash and cash equivalents at March 31*1

23,352*1(Principles of Consolidation)
The accompanying consolidated financial statements include the accounts of the Company and any significant companies controlled directly or indirectly

for by the equity method.
As of March 31, 2018, the numbers of consolidated subsidiaries were 9 (10 in 2017). Non-consolidated subsidiaries whose combined assets, net sales,
profit and retained earnings are not significant in the related consolidated totals, have not been consolidated with the Company. Investments in nonconsolidated subsidiaries and affiliated companies which have immaterial effect on the consolidated financial statements are accounted for at costwithout applying the equity method of accounting. METAWATER USA, INC. and four other subsidiaries are consolidated using their financial statements
as of their fiscal year end, which falls on December 31 and necessary adjustments are made to their financial statements to reflect any significant
transactions from January 1 to March 31. All significant intercompany balances and transactions have been eliminated in consolidation.

1. Valuation standard and methods for significant assets(1) Securities
1)Available-for-sale securities
Available-for-sale securities with market value
Available-for-sale securities with market value are stated at fair value based on the market price as of the end of the accounting period. Any

Financial Information(Summary of Significant Accounting Policies)

unrealized gain or loss, net of applicable taxes is reported as a component of accumulated other comprehensive income. The cost of
securities sold is calculated using the moving average method.

Available-for-sale securities without market value
Available-for-sale securities without market value are stated at cost using the moving average method.

67

METAWATER REPORT 2018

METAWATER REPORT 201868

(2) Inventory(2) Method for amortizing actuarial gain or loss and prior service cost
Prior service cost is amortized as incurred by the straight-line method over a period not exceeding the estimated average remaining service1) Supplies
Supplies are stated at cost using the weighted average method. (Balance sheet amounts are written down on the basis of any decreased

period of employees (10 to 14 years) at the time of occurrence.

profitability.)

Actuarial gain or loss is amortized from the fiscal year following the year in which the gain or loss is recognized, amortized by the straight-line
method over a period not exceeding the average remaining service period of the employees (10 to 14 years) at the time of occurrence.

2) Work in process
Work in process is stated at cost using the individual identification method.
5.

Recognition for revenue and cost
For long-term construction contracts whose outcome can be estimated reliably, the percentage-of-completion method is adopted. The stage(3) Derivativesof completion of a contract is determined by the percentage of the cost incurred to date to the estimated total cost. When the outcome of

Derivatives are stated at fair value.

the construction contracts cannot be estimated reliably, the completed-contract method is adopted.
2.

Method of depreciation and amortization
6.

(1) Property, plant and equipment

Foreign currency translation

Depreciation of property, plant and equipment is mainly computed by the declining-balance method over the applicable useful lives. However,Monetary receivables and payables in foreign currencies are translated into yen using the spot exchange rates on the consolidated balance

the buildings acquired on and after April 1, 1998 (excluding accompanying facilities) and the accompanying facilities and structures acquired on

sheet date, and translation adjustments are recorded as gains or losses. For foreign subsidiaries assets and liabilities are translated into yen

and after April 1, 2016 are depreciated by the straight-line method.

using the spot exchange rates on the consolidated balance sheet date; revenues and expenses are translated into yen using the average

Useful lives of assets are principally as follows:

exchange rates during the period; and translation adjustments are included in foreign currency translation adjustment under net assets.

Buildings and structures:

2 to 50 years

Machinery and equipment:

2 to 17 years

7.

Hedge accounting(1) Hedge accounting method
As interest rate swaps meet the requirements for short-cut method, the accounting is applied to them.

(2) Intangible assets
Intangible assets are amortized by the straight-line method. Computer software for internal use is amortized by the straight-line method over(2) Hedging instruments and hedged items

the estimated useful life of 5 years. Customer-related assets are amortized by the straight-line method over the estimated useful life of 17

Hedging instruments: Interest rate swaps

years.

Hedged items: interest on loans payable3.

Accounting standard for significant allowances and provisions(3) Hedging policy(1) Allowance for doubtful accounts

Interest rate swaps are used on some of loans payable from financial institutions to avoid risks resulting from interest rate fluctuation.

To provide for potential loss on receivables, the Company provides an allowance for the expected amount of irrecoverable receivables.
Allowances for ordinary debt are computed based on the historical rate of default. For certain debts, such as those where recovery is

The evaluation of hedging effectiveness is omitted for interest rate swaps as the requirements for short-cut method are met.

to be unrecoverable. Allowance for doubtful accounts was not recorded at the end of the fiscal year ended March 31, 2018.

(2) Provision for warranties for completed construction

8.

The amortization method and amortization period of goodwill
Goodwill is amortized by the straight-line method over a period of 15 years.

The Company records provision for warranties for completed construction based on the estimated amount of future warranties forconstruction revenue in order to provide for costs of free-of-charge repair under defect liability for contract construction.
9.

Cash and cash equivalents in the consolidated statement of cash flows

Financial Information(4) Method for evaluating hedging effectivenessdoubtful, the Company considers the likelihood of recovery on an individual basis and records an allowance for the amount of debt expected

Cash and cash equivalents consist of cash at hand, demand deposits at banks, and highly liquid short-term investments with negligible risk of(3) Provision for loss on construction contracts

fluctuation in value and maturities of three months or less.

In order to provide for potential loss on construction contracts, the Company records provision for loss on construction contracts at an
estimated amount of loss on contracts undelivered at the end of the fiscal year, loss of which are expected to be incurred and such expectedamount of loss can be reasonably estimated.

10.

Consumption tax
Consumption tax and local consumption tax are excluded from respective transaction amounts.

4.

Accounting method for retirement benefits(1) Method of allocating projected retirement benefit obligation
In calculating the retirement benefit obligation, the benefit formula basis is used to allocate the projected retirement benefit obligation to theestimated periods of service of the eligible employees until the end of the fiscal year.

69

METAWATER REPORT 2018

METAWATER REPORT 2018

70

*5.

Guarantees of indebtedness(Notes to Consolidated Statement of Comprehensive Income)

The Company provides guarantees to the following companies for their loans payable from financial institutions.

*1.

(1) Guarantee for loans payable
As of March 31, 2017
(Millions of yen)

As of March 31, 2018
(Millions of yen)

As of March 31, 2018
(Thousands of U.S. dollars)

179

161

1,515

Osaka Bioenergy Co., Ltd.

Fiscal year ended
March 31, 2017
(Millions of yen)

As of March 31, 2017
(Millions of yen)

As of March 31, 2018
(Millions of yen)

As of March 31, 2018
(Thousands of U.S. dollars)

Ariake Water Management Co., Ltd.

25

25

235

Aizuwakamatsu Aqua Partner Co., Ltd.

622

583

5,487

Sasebo Aqua Solution Co., Ltd.

269

255

2,400

Sorami Bio Partners Co., Ltd.

63

63

592

Northern Akita Eco-resource Management Co.,
Ltd.
Total

Fiscal year ended
March 31, 2018
(Thousands of U.S.
dollars)

Fiscal year ended
March 31, 2018
(Millions of yen)

Valuation difference on available-for-salesecurities
Amount arising during the year

(2) Performance guarantee

13

30

282

Reclassification adjustments

—

—

—

Amount before tax effect

13

30

282

Tax effect

(3)

(9)

(84)

Valuation difference on available-forsale securities

9

21

197

(329)

(49)

(461)

Amount recognized during the year

948

(171)

(1,609)Reclassification adjustments

738

695

6,541

Before tax effect adjustment

1,687

524

4,932

Tax effects

(516)

(160)

(1,506)

1,170

364

3,426

849

336

3,162

Foreign currency translation adjustment
Amount recognized during the year
Remeasurements of defined benefit plans

17

17

999

160

946

8,904

(Notes to Consolidated Statement of Income)*1.

The following table presents reclassification adjustments and tax effects allocated to each component of other comprehensive income for theyears ended March 31, 2018 and 2017

Provision for loss on construction contracts included in cost of sales are as follows:
Fiscal year ended March 31, 2017
(Millions of yen)

Fiscal year ended March 31, 2018
(Millions of yen)

Fiscal year ended March 31, 2018
(Thousands of U.S. dollars)

25

63

592

Remeasurements of defined benefit
plans
Total other comprehensive
income(Notes to Consolidated Statement of Changes in Shareholders’ Equity)
Fiscal year ended March 31, 2017*2.

1. Shares issued

The major items and their amounts of selling, general and administrative expenses are as follows:
Fiscal year ended
March 31, 2017
(Millions of yen)

Fiscal year ended
March 31, 2018
(Millions of yen)

Fiscal year ended
March 31, 2018
(Thousands of U.S. dollars)

Salaries and allowances

4,001

4,066

38,271

Bonuses

1,540

14,495

531

525

4,941

Provision for warranties
for completed construction

172

(243)

(2,287)

1,619

1,706

16,057

Research and development expenses

Common stock(shares)Number of shares
as of April 1, 2016

Increase

Decrease

Number of shares
as of March 31, 201725,923,500——

25,923,500

Number of shares
as of April 1, 2016

Increase

Decrease

Number of shares
as of March 31, 2017

—

44

—

44

2. Treasury stock
Type of shares
Common stock(shares)(Details of the changes)

*3.

*4.

Increase resulting from purchase of shares less than one unit: 44 shares

The details of loss on disposal of non-current assets are as follows:
Fiscal year ended March 31, 2017

Fiscal year ended March 31, 2018

Loss on sales and retirement of machinery and equipment

Loss on sales and retirement of machinery and equipment

Total amount of research and development expenses included in general and administrative expenses and in production cost in the fiscal year are
as follows:
Fiscal year ended March 31, 2017
(Millions of yen)

Fiscal year ended March 31, 2018
(Millions of yen)

Fiscal year ended March 31, 2018
(Thousands of U.S. dollars)

1,619

1,706

16,057

3. Dividends(1) Dividends paid
Resolution

Type of shares

Total amount ofdividends(Millions of yen)

Dividend per share(Yen)

Cut-off date

Effective date

Board of Directors’
meeting held on May
22, 2016

Common stock

751

29.00

March 31, 2016

June 6, 2016

Board of Directors’
meeting held on
November 14, 2016

Common stock

751

29.00

September 30, 2016

December 2, 2016

Financial Information

1,428

Retirement benefit expenses

Type of shares(2) Dividends whose record date falls in the fiscal year ended March 31, 2017, but whose effective date is in the following fiscal year

73

METAWATER REPORT 2018

Resolution

Type ofshares

Source ofdividends

Total amount ofdividends(Millions of yen)

Dividend pershare (Yen)

Cut-off date

Effective date

Board of Directors’
meeting held on May 23,
2017

Commonstock

Retainedearnings

751

29.00

March 31, 2017

June 8, 2017

METAWATER REPORT 201874

(Unapplied Accounting Standards, etc.)(Notes to Consolidated Balance Sheets)- Accounting Standards Board of Japan (ASBJ) Statement No. 29 “Accounting Standard for Revenue Recognition” (March 30, 2018)*1.

Investments in non-consolidated subsidiaries and affiliated companies are as follows:- ASBJ Guidance No. 30 “Implementation Guidance on Accounting Standard for Revenue Recognition” (March 30, 2018)

As of March 31, 2017
(Millions of yen)

As of March 31, 2018
(Millions of yen)

As of March 31, 2018
(Thousands of U.S. dollars)

1,000

1,020

9,600

As of March 31, 2017
(Millions of yen)

As of March 31, 2018
(Millions of yen)

As of March 31, 2018
(Thousands of U.S. dollars)

3,467

3,491

32,859Investment securities(1) Outline
A comprehensive accounting standard on revenue recognition. Revenue is recognized by applying the following five steps.
Step 1: Identify the contract with a customer*2.

Accumulated depreciation of property, plant and equipment

Step 2: Identify performance obligations in the contract
Step 3: Determine the transaction price

Accumulated depreciation ofproperty, plant and equipment

Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) the performance obligations are satisfied*3.
(2) Scheduled date of application“Current portion of PFI and other project finance loans” and “PFI and other project finance loans” are loans payable secured by the PFI businessfrom financial institutions to WATER NEXT YOKOHAMA Co., Ltd., which is a special purpose company established for the PFI business and the

They are scheduled to be applied from the beginning of the fiscal year ending March 31, 2022.

Company’s consolidated subsidiary, and other consolidated subsidiaries.
The amounts of assets including accounts receivable of the special purpose company corresponding to the above PFI and other project finance(3) Impact of application of the accounting standard, etc.

loans are as follows:

The impact of application is under evaluation at the time of preparing the consolidated financial statements.

As of March 31, 2017
(Millions of yen)
Cash and deposits

As of March 31, 2018
(Millions of yen)614

Notes and accounts receivable - trade
Total

706

As of March 31, 2018
(Thousands of U.S. dollars)
6,645

14,035

13,630128,294

14,65014,337

134,949

As of March 31, 2018
(Millions of yen)

As of March 31, 2018
(Thousands of U.S. dollars)

The following assets eliminated in the consolidation procedures are pledged as security.
As of March 31, 2017
(Millions of yen)
152

152

1,430

Long-term loans receivable

560

524

4,932

Total

712

676

6,362

The following assets are pledged as security for PFI and other project finance loans to subsidiaries and affiliated companies operating the PFI
business (non-consolidated).
As of March 31, 2017
(Millions of yen)

71

METAWATER REPORT 2018

As of March 31, 2018
(Millions of yen)

As of March 31, 2018
(Thousands of U.S. dollars)

Cash and deposits

878

827

7,784

Investment securities

396

405

3,812

Long-term loans receivable

236

211

1,986

Total

1,510

1,444

13,591METAWATER REPORT 2018

Financial Information*4.

Investments in subsidiaries

72

Fiscal year ended March 31, 2018

(Financial Instruments)

1. Shares issued

1. Overview

Type of shares
Common stock(shares)Number of shares
as of April 1, 2017

Increase

Decrease

Number of shares
as of March 31, 201825,923,500——

25,923,500(1) Group policy for financial instruments
The Group restricts its fund management to short-term deposits and raises funds through loans from financial institutions including banks.
Derivatives are used for receivables and payables arising from transactions associated with the actual demand, and the Group does not intend to
make speculative transactions.

2. Treasury stock
Type of shares

Number of shares
as of April 1, 2017

Increase

Decrease

Number of shares
as of March 31, 2018

44

47

—

91

Common stock(shares)

Although notes and accounts receivable - trade are exposed to customer credit risk, the Group works to reduce such risk in accordance with credit
management rules. Although trade receivables in foreign currencies arising from overseas operations are exposed to currency fluctuation risk, they

(Details of the changes)

are hedged with forward foreign currency contracts where necessary.

Increase resulting from purchase of shares less than one unit: 47 shares

Investment securities are mainly limited to shares of companies with which the Group has built a business relationship. Listed stocks are
exposed to risk of fluctuation in the market value, while they are marked to market on a quarterly basis.

3. Dividends(1) Dividends paid
Resolution(2) Type of financial instruments, related risk and risk management system

The payment terms of notes and accounts payable - trade are mostly one year or less than one year.
Type of shares

Board of Directors’
meeting held on May
23, 2017

Common stock

Board of Directors’
meeting held on
November 14, 2017

Common stock

Total amount ofdividends(Millions of yen)

Dividend per share(Yen)

Cut-off date

751

29.00

March 31, 2017

Effective date

Although some of trade payables are denominated in foreign currencies and are exposed to currency fluctuation risk, they are hedged withforward foreign currency contracts where necessary.

June 8, 2017

Loans payable are mainly used for the acquisition of shares of subsidiaries, with the maximum maturity period of 8 years after the balance
sheet date. PFI and other project finance loans are intended to raise funds for specific businesses such as the PFI business, with the maximum

751

29.00

September 30, 2017

December 4, 2017

maturity period of 15 years and 8 months after the accounting period. Although some of PFI and other project finance loans are exposed to risk ofinterest rate fluctuation, while they are hedged with derivatives (interest rate swaps).
Derivatives include forward foreign currency contracts which are used to hedge currency fluctuation risk associated with trade receivables andResolution

Type of shares

Total amount ofdividends(Thousands of U.S.
dollars)

Dividend per share(U.S. dollars)

Cut-off date

Effective date

Board of Directors’
meeting held on May
23, 2017

Common stock

7,068

0.27

March 31, 2017

June 8, 2017

Board of Directors’
meeting held on
November 14, 2017

Common stock

payables, and interest rate swaps which are used to hedge risk of fluctuation in interest on loans payable. The evaluation of hedging effectivenessis omitted based on the judgment that interest rate swaps meet the requirements for short-cut method.

2. Fair value of financial instruments
The carrying value of financial instruments on the consolidated balance sheets as of March 31, 2018 and 2017 and estimated fair value are shown

7,068

0.27

September 30, 2017

December 4, 2017

in the following table. The financial instruments whose fair value is deemed extremely difficult to determine are not included in the table below(please see Note 2).

Financial Information(2) Dividends whose record date falls in the fiscal year ended March 31, 2018, but whose effective date is in the following fiscal year
Resolution

Type ofshares

Source ofdividends

Total amount ofdividends(Millions of yen)

Dividend pershare (Yen)

Cut-off date

Effective date

Board of Directors’
meeting held on May 23,
2018

Commonstock

Retainedearnings

751

29.00

March 31, 2018

June 7, 2018

Resolution

Type ofshares

Source ofdividends

Cut-off date

Effective date

Board of Directors’
meeting held on May 23,
2018

Commonstock

Retainedearnings

March 31, 2018

June 7, 2018

Total amount ofdividends
Dividend per share(Thousands of U.S.
(U.S. dollars)
dollars)
7,068

0.27

(Notes to Consolidated Statement of Cash Flows)*1.

Cash and cash equivalents in the consolidated statement of cash flows are reconciled to cash and deposits in the consolidated balance sheets asfollows:

Cash and deposits
Time deposits with maturities of over threemonthsCash and cash equivalents

75

METAWATER REPORT 2018

Fiscal year ended
March 31, 2017
(Millions of yen)

Fiscal year ended
March 31, 2018
(Millions of yen)

Fiscal year ended
March 31, 2018
(Thousands of U.S.
dollars)

24,23025,805

242,893

(878)

(827)

(7,784)23,352

24,977

235,099

METAWATER REPORT 201876

As of March 31, 2017

(Note 1) Computation method of fair values of financial instruments and other matters concerning securities and derivatives
AssetsCarrying value(Millions of yen)

Fair value(Millions of yen)

Difference(Millions of yen)

(1) Cash and deposits

24,23024,230—(2) Notes and accounts receivable - trade67,946

67,779(167)(1)

Cash and deposits
The fair value of cash and deposits is based on their carrying amount, since the fair value approximates their carrying amount due to the shortmaturity period of the instrument.

(3) Investment securities
Available-for-sale securities
Total assets

81

81

—

92,25892,090(167)(1) Notes and accounts payable - trade

20,037

20,037—(2) Electronically recorded obligations

7,637

7,637

—

(3) Short-term loans payable

284

284

—

(4) Current portion of PFI and other projects
finance loans

825

825

—

(5) Long-term loans payable

2,436

2,499

63

(6) PFI and other projects finance loans

12,382

12,687305(7) Derivatives
Total liabilities

—

—

—

35,96636,334368(2)

Notes and accounts receivable - trade
The fair value of notes and accounts receivable - trade is based on their present value calculated by discounting the amount of each receivableclassified by a certain period using a discount rate that reflects the credit risk and the period until the maturity.

(3)

Investment securities
The fair value of stocks is based on their prices quoted on the concerned stock exchanges.

Liabilities(1)

As of March 31, 2018

Notes and accounts payable - trade, (2) Electronically recorded obligations, (3) Short-term loans payable and (4) Current portion of PFI and otherproject finance loans
The fair value of notes and accounts payable - trade, electronically recorded obligations, short-term loans payable and current portion of PFI and

Carrying value(Millions of yen)

Fair value(Millions of yen)

Difference(Millions of yen)

(1) Cash and deposits

25,80525,805—(2) Notes and accounts receivable - trade72,16472,061

(103)

111

111

—

(3) Investment securities
Available-for-sale securities

98,08197,978(103)(1) Notes and accounts payable - trade

Total assets

18,372

18,372—(2) Electronically recorded obligations

8,155

8,155

—

2,050

2,053

2

(6) PFI and other projects finance loans

11,54911,819

270

—

—

—

41,23041,503

272

Carrying value(Thousands of U.S.
dollars)

Fair value(Thousands of U.S.
dollars)

Difference(Thousands of U.S.
dollars)(7) Derivatives
Total liabilities

269

269

—

833

833

—

(1) Cash and deposits

242,893242,893—(2) Notes and accounts receivable - trade679,254678,285(969)(3) Investment securities
Available-for-sale securities

1,044

1,044

—

923,202922,232(969)(1) Notes and accounts payable - trade

172,929

172,929—

Total assets(2) Electronically recorded obligations

76,76076,760—(3) Short-term loans payable(4) Current portion of PFI and other projects
finance loans(5) Long-term loans payable

2,532

2,532

—

7,840

7,840

—

19,29519,32418(6) PFI and other projects finance loans

108,706

111,248

2,541(7) Derivatives
Total liabilities

77

METAWATER REPORT 2018

—

—

—

388,083

390,653

2,560

period of the instruments.

(5)Long-term loans payable and (6) PFI and other project finance loans
The fair value of long-term loans payable and PFI and other project finance loans is computed based on their present value calculated bydiscounting the aggregate value of principal and interest using the discount rate at which a similar and new borrowing is assumed to be made.

(7)

Derivatives
The fair value of interest rate swaps is based on the quoted price obtained from the counterparty financial institution.
Since interest rate swaps under short-cut method are treated together with long-term loans payable and PFI and other project finance loans thatare subject to hedging, their fair value is included in the fair value of PFI and other project finance loans.

(Note 2) The amount of financial instruments recorded in the consolidated balance sheets, of which it is deemed extremely difficult to determine the fairvalue.

Category
Unlisted stocks (including shares of non-consolidated
subsidiaries and affiliated companies)

As of March 31, 2017
(Millions of yen)

As of March 31, 2018
(Millions of yen)

As of March 31, 2018
(Thousands of U.S.
dollars)

1,123

1,233

11,605

Financial Information(3) Short-term loans payable(4) Current portion of PFI and other projects
finance loans(5) Long-term loans payable

other project finance loans is based on their carrying amounts, since the fair value approximates their carrying amounts due to the short maturity

Since there is no quoted market price for the above item and it is deemed extremely difficult to determine its fair value, the item is not included in “(3)Investment securities”.

METAWATER REPORT 201878

(Note 4) The repayment schedule for loans payable and PFI and other project finance loans subsequent to the consolidated closing date

(Note 3) The redemption schedule for monetary receivables subsequent to the consolidated closing date
As of March 31, 2017

As of March 31, 2017
Due in one year or
less(Millions of yen)

Due after one year Due after five years
Due after ten years
through five years through ten years(Millions of yen)
(Millions of yen)
(Millions of yen)

Cash and deposits

24,230———Notes and accounts receivable - trade

54,811

3,710

4,365

5,059

79,041

3,710

4,365

5,059

Total

Due in one year or
less(Millions of yen)

Due after one year Due after five years
through five years through ten years(Millions of yen)
(Millions of yen)

Due after ten years
through fifteen
years(Millions of yen)

Due after fifteen
years(Millions of yen)

Loans payable

284

1,138

1,298

—

—

PFI and other projects finance loans

825

3,395

3,952

3,639

1,394

1,109

4,534

5,250

3,639

1,394

Due after ten years
through fifteen
years(Millions of yen)

Due after fifteen
years(Millions of yen)

Total
As of March 31, 2018
As of March 31, 2018
Due in one year or
less(Millions of yen)

Due after one year Due after five years
Due after ten years
through five years through ten years(Millions of yen)
(Millions of yen)
(Millions of yen)

Cash and deposits

25,805———

Notes and accounts receivable - trade60,182

3,580

3,876

4,524

85,987

3,580

3,876

4,524

Total

Due in one year or
less(Millions of yen)
Loans payable

269

1,253

796

—

—

PFI and other projects finance loans

833

3,436

3,787

3,624

701

1,103

4,690

4,584

3,624

701

Total
Due in one year or Due after one year Due after five years
Due after ten years
lessthrough five years through ten years(Thousands of U.S.
(Thousands of U.S. (Thousands of U.S. (Thousands of U.S.
dollars)
dollars)
dollars)
dollars)
242,893———

Notes and accounts receivable - trade566,472

33,69736,48342,582

809,365

33,69736,48342,582Total

Due after ten years
Due in one year or Due after one year Due after five years
Due after fifteen
through fifteen
lessthrough five years through ten years
years
years
(Thousands of U.S. (Thousands of U.S. (Thousands of U.S.
(Thousands of U.S.
(Thousands of U.S.
dollars)
dollars)
dollars)
dollars)
dollars)
Loans payable

2,532

11,794

7,492

—

—

PFI and other projects finance loans

7,840

32,34135,645

34,111

6,598

10,38244,14543,147

34,111

6,598

Total

79

METAWATER REPORT 2018

METAWATER REPORT 2018

Financial Information

Cash and deposits

Due after one year Due after five years
through five years through ten years(Millions of yen)
(Millions of yen)

80

(Securities)(Derivatives)

Available-for-sale securities

1. Derivative transactions to which hedge accounting is not applied
No items to report.

As of March 31, 2017
Category

Carrying value(Millions of yen)

Acquisition cost
(Millions of yen)

Unrealized gain (loss)(Millions of yen)Amounts in the consolidated balance sheets
exceeding acquisition cost:
StocksTotal

2. Derivative transactions to which hedge accounting is applied
Interest rate-related derivatives

81

33

47

81

33

47

As of March 31, 2017
Hedge accounting
methodAs of March 31, 2018
Category

Carrying value(Millions of yen)

Acquisition cost
(Millions of yen)

Unrealized gain (loss)(Millions of yen)Amounts in the consolidated balance sheets
exceeding acquisition cost:
Stocks
Total

Category

111

33

78

111

33

78

Carrying value(Thousands of U.S. dollars)

Acquisition cost(Thousands of U.S. dollars)

Unrealized gain (loss)(Thousands of U.S. dollars)

Amounts in the consolidated balance sheets
exceeding acquisition cost:
Stocks
Total

Short-cut method
for interest rate
swaps

310

734

1,044

310

734

Contract amountdue after one year
(Millions of yen)

Fair value(Millions of yen)

Long-term loans
payable

1,262

1,121

(Note)

PFI and otherprojects financeloans

12,075

11,328(Note)

13,337

12,520Main hedged
itemsInterest rate swaps:
Payment on a
floating interest
rate/Receiving on
a fixed interest rate
Interest rate swaps:
Payment on a
floating interest
rate/Receiving on
a fixed interest rate
Total

(Note)
1,044

Contract amount(Millions of yen)Type of derivativetransaction

Since interest rate swaps to which short-cut method is applied are accounted together with long-term loans payable and PFI and other project
finance loans that are subject to hedging, their fair value is included in the fair value of such long-term loans payable and PFI and other project
finance loans.

As of March 31, 2018

Hedge accounting
methodContract amountdue after one year
(Millions of yen)

Fair value(Millions of yen)

Long-term loans
payable

1,062

929

(Note)

PFI and otherprojects financeloans

11,328

10,573(Note)

12,391

11,503Contract amount(Thousands of
U.S. dollars)

Contract amountdue after one year
(Thousands of
U.S. dollars)

Fair value(Thousands of
U.S. dollars)

Main hedged
itemsInterest rate swaps:
Payment on a
floating interest
rate/Receiving on
a fixed interest rate
Interest rate swaps:
Payment on a
floating interest
rate/Receiving on
a fixed interest rate
Total

Hedge accounting
methodShort-cut method
for interest rate
swaps

Type of derivativetransaction

Main hedged
itemsInterest rate swaps:
Payment on a
floating interest
rate/Receiving on
a fixed interest rateLong-term loans
payable

9,996

8,744

(Note)

Interest rate swaps:
Payment on a
floating interest
rate/Receiving on
a fixed interest rate

PFI and otherprojects financeloans

106,626

99,519(Note)

116,632

108,273

Total(Note)

Financial Information

Short-cut method
for interest rate
swaps

Contract amount(Millions of yen)Type of derivativetransaction

Since interest rate swaps to which short-cut method is applied are accounted together with long-term loans payable and PFI and other project
finance loans that are subject to hedging, their fair value is included in the fair value of such long-term loans payable and PFI and other project
finance loans.

81

METAWATER REPORT 2018

METAWATER REPORT 201882

(Retirement Benefits)
1.

(3)

Overview of retirement benefit plans

The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheets as of March 31,2017 and 2018 for the Company’s and the consolidated subsidiaries’ defined benefit plans:

The Company has lump-sum payment plans and a contract-type corporate pension plan as its defined benefit plan. In addition, the Company has a

As of March 31, 2017
(Millions of yen)defined contribution pension plan. The Company has established a retirement benefit trust.

As of March 31, 2018
(Millions of yen)

As of March 31, 2018
(Thousands of U.S. dollars)

Certain overseas consolidated subsidiaries have a defined benefit or defined contribution plan.
Certain domestic consolidated subsidiary has The Smaller Enterprise Retirement Allowance Mutual Aid Scheme. In addition to such scheme,
certain domestic consolidated subsidiary has a retirement benefit plan under which such subsidiary pays additional retirement benefits to employees
who meet the prescribed requirements upon their retirement.
In certain cases, the Group may also pay additional retirement benefits that are not subject to any actuarial calculations.

2.

Defined benefit plans(1) The changes in the retirement benefit obligation are as follows:

Fiscal year ended
March 31, 2017
(Millions of yen)

Fiscal year ended
March 31, 2018
(Millions of yen)

Fiscal year ended
March 31, 2018
(Thousands of U.S.
dollars)

16,015

16,554

155,817

Service cost

719

730

6,871

Interest cost

148

151

1,421

Actuarial gain and loss

151

95

894

Retirement benefits paid

(6,635)Retirement benefit obligation at the beginning of the year

Funded retirement benefit obligation

14,243

14,426

135,786

Plan assets at fair value(11,960)(12,331)(116,067)

2,283

2,094

19,710Unfunded retirement benefit obligation

2,310

2,378

22,383

Net amount of liabilities and assets recognized in the
consolidated balance sheet

4,594

4,473

42,102

Liability for retirement benefit

5,350

5,294

49,830Assets for retirement benefits

(756)

821

7,727

Net amount of liabilities and assets recognized in the
consolidated balance sheet

4,594

4,473

42,102(4) The components of retirement benefit expenses are as follows:

Fiscal year ended
March 31, 2017
(Millions of yen)

Fiscal year ended
March 31, 2018
(Millions of yen)

Fiscal year ended
March 31, 2018
(Thousands of U.S.
dollars)
6,871

(457)

(705)

Increase associated with new consolidation

—

—

—

Service cost

719

730

Other

(23)

(21)

(197)

Interest cost

148

151

1,421

16,554

16,804

158,170

Expected return on plan assets

(130)

(139)

(1,308)

Amortization of actuarial gain or loss

807

668

6,287

Amortization of prior service cost

7

7

65

Retirement benefit obligation at the end of the year

Other(2) The changes in plan assets are as follows:

Retirement benefit expenses

Expected return on plan assets

Fiscal year ended
March 31, 2018
(Millions of yen)

Fiscal year ended
March 31, 2018
(Thousands of U.S.
dollars)

10,371

11,960112,575
1,308

(33)

(310)

1,385

13,036(5) The components of remeasurements of defined benefit plans included in other comprehensive income (before tax effect) are as follows:
Fiscal year ended
March 31, 2017
(Millions of yen)

Fiscal year ended
March 31, 2018
(Thousands of U.S.
dollars)

130

139

1,023

(56)

(527)

Contribution by the companies

584

586

5,515

Prior service cost

(7)

(7)

(65)

Retirement benefits paid

(160)

(317)

(2,983)

Actuarial gain and loss

(1,679)(516)(4,856)

Increase associated with new consolidation

—

—

—

Total

(1,687)(524)(4,932)

Other

10

19

178

11,96012,331116,067

Actuarial gain and loss

Plan assets at fair value at the end of the year

(6)

The components of remeasurements of defined benefit plans included in accumulated other comprehensive income (before tax effect) are as
follows:
As of March 31, 2017
(Millions of yen)
Unrecognized prior service cost

83

Fiscal year ended
March 31, 2018
(Millions of yen)

METAWATER REPORT 2018

Financial Information

Plan assets at fair value at the beginning of the year

Fiscal year ended
March 31, 2017
(Millions of yen)

(26)
1,526

As of March 31, 2018
(Millions of yen)

As of March 31, 2018
(Thousands of U.S. dollars)

34

25

235

Unrecognized actuarial gain and loss

4,056

3,540

33,320

Total

4,090

3,565

33,556METAWATER REPORT 201884

(7) The fair value of plan assets, by major category as a percentage of total plan assets are as follows:
As of March 31, 2017

As of March 31, 2018

As of March 31, 2017
(Millions of yen)

As of March 31, 2018
(Millions of yen)

As of March 31, 2018
(Thousands of U.S.
dollars)

Stocks42%

37%

Current assets—Deferred tax assets

1,582

1,492

14,043

Bonds

30

35

Non-current assets—Deferred tax assets

2,513

2,087

19,644General accounts

21

22

Current liabilities—Other current liabilities

122

115

1,082

Short-term assets

3

1

Other

4

6

Total

100

100

(Note)

2. The breakdown of major items that caused differences between the effective statutory tax rate and the effective income tax rate

Retirement benefit trust established for the corporate pension plans is included and equivalent to 9.2% of total amount of plan assets as ofMarch 31, 2017 and 8.7% as of March 31, 2018.

As of March 31, 2017

As of March 31, 2018

30.9%

30.9%

Permanently non-deductible items such as entertainment expenses

3.9

3.8

Permanently non-taxable items such as dividends income

(1.4)

(0.1)

Per capita inhabitants’ tax

1.0

1.0

Tax credit for experiment and research expenses

(2.8)

(2.1)

Reduction of deferred tax assets at end of period due to change in tax rates—

2.1

Changes in valuation allowance

(4.5)

0.4

Difference in tax rates of overseas consolidated subsidiaries

(2.0)

0.0

Other

(1.8)

2.9

Effective income tax rate

23.4

38.9

Effective statutory tax rate
(Adjustment)

The long-term expected rate of return on plan assets have been determined as a result of consideration of both the portfolio allocation at present
and in the future, and long-term rates of return from multiple plan assets at present and in the future.

(8) The assumptions used in accounting for the defined benefit plans are as follows:
Fiscal year ended March 31,
2017
Discount rates

0.7–1.2%

Long-term expected rates of return on plan assets
Expected rates of salary increase3.

Fiscal year ended March 31,
2018
0.5–1.2%

Mainly 1.5

Mainly 1.5

1.2–8.5

1.2–8.5(Asset Retirement Obligations)Defined contribution plans
Contributions of defined contribution plans for the fiscal years ended March 31, 2017 and 2018 were \139 million and ¥140 million (US$1,317
thousand), respectively.

The Group recognizes asset retirement obligations to restore corporate offices to their original condition upon termination of their lease contracts.
However, the statement is omitted because the total amount of the asset retirement obligations is immaterial.
Regarding some of the obligation to restore corporate offices to their original condition, the Group estimate nonrecoverable amounts of deposits for
those premises and record the portion attributable to the current year as expenses, instead of recording asset retirement obligations.

(Income Taxes)
1. The significant components of deferred tax assets and deferred tax liabilities(Segment Information)
As of March 31, 2018
(Millions of yen)

As of March 31, 2018
(Thousands of U.S.
dollars)[Segment Information]
1. Outline of reportable segment
The Company’s segments represent components of the Company for which separate financial information is available and that are subject toDeferred tax assets:

periodical review by the board of directors in determining how to allocate operating resources and evaluating performance.

Enterprise tax payable

186

180

1,694

Accrued bonuses

799

873

8,217

Provision for loss on construction contracts

54

64

602

Provision for warranties for completed
construction

288

209

1,967

Therefore, the Group basically consists of two reportable segments: “Plant Engineering” and “Service Solutions”, which are based on the

Excess of depreciation

The Company has established business headquarters by its products and services at the corporate office, each of which operates undercomprehensive domestic and overseas strategies developed for its products and services.

342

318

2,993

Company’s business headquarters in consideration of similarities of types and natures of products and services. The “Plant Engineering” segment isLiability for retirement benefit

2,209

2,154

20,274

primarily involved in design and construction of water and sewage treatment plants. The “Service Solutions” segment is primarily involved in

Other

1,219

777

7,313

operation, control and repair of water and sewage treatment plant facilities.

Subtotal

5,100

4,578

43,091

Valuation allowance

(142)

(168)

(1,581)

Total deferred tax assets

4,957

4,410

41,509Gain on contribution of securities toretirement benefit trust

(656)

(691)

(6,504)

Other

(327)

(254)

(2,390)Total deferred tax liabilities

(984)

(945)

(8,894)

Net deferred tax assets (liabilities)

3,972

3,465

32,614

Deferred tax liabilities:

Financial Information

As of March 31, 2017
(Millions of yen)

2. Determination of sales, income or loss, assets, liabilities and other items for each reportable segment
Accounting treatment applied to the business segment reported is generally consistent with accounting treatment stated in “Important Matters for
Basis of Preparation of Consolidated Financial Statements”.
In addition, segment income is determined based on operating income, which is consistent with operating income for the consolidated
statement of income.

(Note) Net deferred tax assets are included in the following items of the consolidated balance sheets.

85

METAWATER REPORT 2018

METAWATER REPORT 201886

3. Sales, income or loss, assets, liabilities and other items by reportable segment[Related Information]
Fiscal year ended March 31, 2017

Fiscal year ended March 31, 2017
(Millions of yen)

1. Information by products and services
A description is omitted because similar information has been disclosed under segment information.

Reportable segments
Adjustments(Note)

Plant
Engineering
Business

Service
Solutions
Business

Total

66,78844,899111,688—

111,688

—

—

—

—

—

Consolidated
2. Information by region(1) Net sales

Net sales
Sales to third parties
Inter-segment sales and transfers

66,78844,899111,688—

111,688

Segment income

Total

1,675

4,652

6,328

—

6,328

Segment assets

51,986

43,52995,51625,444

120,961A description is omitted because sales to third parties in Japan exceed 90% of net sales in the consolidated statement of income.

(2) Property, plant and equipment(Millions of yen)Japan

North America

Total

1,395

1,663

3,059

Name of customer

Net sales

Related business segment

TOKYO METROPOLITAN GOVERNMENT

17,704

Plant Engineering Business
Service Solutions Business

Other items
Depreciation

679

419

1,099

—

1,099

Capital expenditures

490

208

699

—

699

(Note) The amount of corporate assets included in adjustments of segment assets is \25,444 million. The corporate assets mainly represent cash and3. Information about major customers(Millions of yen)deposits and investment securities.

Fiscal year ended March 31, 2018
(Millions of yen)
Reportable segments
Adjustments(Note)

Fiscal year ended March 31, 2018

Plant
Engineering
Business

Service
Solutions
Business

Total

64,96545,930110,895

—

—

—

—

—

—

64,96545,930110,895—

110,895

Segment income

2,623

4,121

6,745

—

6,745

Segment assets

46,37449,07995,453

27,538122,991

Depreciation

862

578

1,441

—

1,441

Capital expenditures

582

174

757

—

757

Consolidated

1. Information by products and services
A description is omitted because similar information has been disclosed under segment information.

Net sales
Sales to third parties
Inter-segment sales and transfers
Total

110,895
2. Information by region(1) Net sales
A description is omitted because sales to third parties in Japan exceed 90% of net sales in the consolidated statement of income.

Other items(Millions of yen)Japan

North America

Total

1,171

1,810

2,982

Japan

North America

Total

11,022

17,03628,068Name of customer

Net sales

Related business segment

TOKYO METROPOLITAN GOVERNMENT

17,256

Plant Engineering Business
Service Solutions Business

Name of customer

Net sales

Related business segment

TOKYO METROPOLITAN GOVERNMENT

162,424

Plant Engineering Business
Service Solutions Business

Reportable segments
Adjustments(Note)(Thousands of U.S. dollars)

Plant
Engineering
Business

Service
Solutions
Business

Total

611,492

432,323

1,043,815

—

—

—

—

—

—

611,492

432,323

1,043,815—

1,043,815

Segment income

24,68938,78963,488—63,488Segment assets

436,502461,963

898,465259,205

1,157,671

Consolidated

Net sales
Sales to third parties
Inter-segment sales and transfers
Total

1,043,815

Other items
Depreciation

8,113

5,440

13,563—

13,563

Capital expenditures

5,478

1,637

7,125

—

7,125

(Note) The amount of corporate assets included in adjustments of segment assets is ¥27,538 million (US$259,205 thousand). The corporate assets
mainly represent cash and deposits and investment securities.

87

METAWATER REPORT 2018

Financial Information(Thousands of U.S. dollars)(2) Property, plant and equipment

3. Information about major customers(Millions of yen)(Thousands of U.S. dollars)

METAWATER REPORT 201888

[Information about Impairment Loss on Non-current Assets by Reportable Segment](Related Party Information)

Fiscal year ended March 31, 2017

Fiscal year ended March 31, 2017

A description is omitted because the amount is immaterial.

1.

Business transactions with related parties(1)Business transactions between the company filing the consolidated financial statements and related parties

Fiscal year ended March 31, 2018

Unconsolidated subsidiaries and affiliated companies of the company filing the consolidated financial statements

No items to report.
Category

Related party

Address[Information about Amortization and Unamortized Balance of Goodwill by Reportable Segment]

Fiscal year ended March 31, 2017
(Millions of yen)

Otheraffiliate

NGK
INSULATORS,
LTD.

Mizuhoku,
Nagoyashi

FUJI ELECTRIC
CO., LTD.

Kawasaki-ku,
Kawasaki-shi

Percentage ofvoting rights
holding (held)(%)

Capital stock orcontributions(Millions of yen)Type of business

69,849Development, manufacture,and sale of products related
to electric power, ceramics,
electronics, and process
technology, and provision ofservices related thereto(Held)
Direct 28.9

Amortization
Unamortized balance

Corporate/
Eliminations

Service
Solutions
Business

Total

Development, manufacture,and sale of products related
to power electronics
systems, electric
generation, electronic
devices and food
distribution, and provision ofservices related thereto

136

—

136

—

136

(Held)
Direct 28.9

2,045

—

2,045

—

2,045

Total

Other
affiliate47,586

Fiscal year ended March 31, 2018
(Millions of yen)
Reportable segments
Plant
Engineering
Business
Amortization
Unamortized balance

Service
Solutions
Business

Total

Corporate/
Eliminations

Total

140

—

140

—

140

1,842

—

1,842

—

1,842

FUJI FURUKAWAENGINEERING &CONSTRUCTION
CO. LTD.

Subsidiaryof otheraffiliate

Saiwaiku,
Kawasaki
-shi

1,970

Design and execution of
construction of plantfacilities, air conditioning/
electricity/building/incidental
facilities, andtelecommunications—(Notes)Service
Solutions
Business

Total

—

1,317

—

1,317

Unamortized balance

17,338—17,338—17,338

1,502

Notes andaccounts
payable trade

1,447

Purchase of
products

Purchase of
products(Note 1, 2)

8,483

Notes andaccounts
payable trade

3,645

Acceptance ofconstruction
contracts ofsaid company

Acceptance ofconstruction
contracts(Note 1, 2)

1,136

Accounts
receivable- trade1,029

Entrustmentof theCompany’s
construction
contracts

Entrustment ofconstruction
contracts(Note 1, 2)

4,756

Notes andaccounts
payable trade

1,472

Concurrent
holding of
positions byofficers

Of the amounts stated above, the transaction amount excludes consumption taxes, while the balance at end of the fiscal year includes
consumption taxes.

2.

1,317

[Information about Gain on Bargain Purchase by Reportable Segment]

1.

Total

Amortization

Purchase of
products(Note 1, 2)

RelationshipTransaction terms and the policy to determine transaction terms
Transaction terms such as prices are determined through negotiation in each case based on a quotation as is the case with generaltransactions, as well as by reference to actual situation of the market.

(2)Business transactions between consolidated subsidiaries of the company filing the consolidated financial statements and related parties
No items to report.

Fiscal year ended March 31, 2017
No items to report.
2.
Fiscal year ended March 31, 2018

Financial Information

Plant
Engineering
Business

Corporate/
Eliminations

Balance atthe end ofyear(Millions ofyen)Concurrent
holding of
positions byofficers(Thousands of U.S. dollars)
Reportable segments

Account
title

Purchase of
products

Reportable segments
Plant
Engineering
Business

Transaction
amount(Millions ofyen)

Nature oftransaction

Note concerning the parent company or significant affiliated companies
No items to report.

No items to report.

89

METAWATER REPORT 2018

METAWATER REPORT 201890

Fiscal year ended March 31, 2018
1.

(Amounts per Share)
Fiscal year ended
March 31, 2017
(Yen)

Fiscal year ended
March 31, 2018
(Yen)

Fiscal year ended
March 31, 2018
(U.S. dollars)

Net assets per share

2,011.42

2,118.02

19.93

Net income per share

182.95151.65

1.42

Fiscal year ended
March 31, 2018
(Millions of yen)

Fiscal year ended
March 31, 2018
(Thousands of U.S.
dollars)

Business transactions with related parties(1)Business transactions between the company filing the consolidated financial statements and related parties
Unconsolidated subsidiaries and affiliated companies of the company filing the consolidated financial statements

Category

Related party

Other
affiliate

FUJI ELECTRIC
CO., LTD.

Address

Kawasaki-ku,
Kawasaki-shi

Capital stockor
contributions(Millions ofyen)Type of business

47,586(US$447,910
thousand)Development, manufacture,and sale of products related
to power electronics
systems, electric generation,
electronic devices and food
distribution, and provision ofservices related thereto

Percentage
of votingrightsholding(held) (%)(Held)
Direct 28.9

Relationship

Nature oftransaction

Purchase of
products

Purchase of
products(Note 1, 2)

Entrustment of
the Company’s
construction
contracts

Entrustmentofconstruction
contracts(Note 1, 2)

Transaction
amount(Millions ofyen)Account
title

9,209
(US$86,681
thousand)

Notes andaccounts
payable trade

Balance atthe endof year(Millions ofyen)(Notes)1.

Diluted net income per share is not presented as there are no diluted shares.

2.

Net income per share is calculated on the following basis.

Fiscal year ended
March 31, 2017
(Millions of yen)

3,846
(US$36,201
thousand)

Net income per share

FUJI FURUKAWAENGINEERING &CONSTRUCTION
CO. LTD.

Subsidiaryof otheraffiliate

Subsidiaryof otheraffiliate(Notes)Hokkaido Fuji
Electric Co., Ltd.

1.

Saiwaiku,
Kawasaki-shi

Chuo-ku,
Sapporoshi

1,970(US$18,542
thousand)

Design and execution of
construction of plantfacilities, air conditioning/
electricity/building/incidental
facilities, andtelecommunications

Sale, installation, and repair
100of electrical machinery and(US$941
apparatus/control systems
thousand)and electronic components

4,636(US$43,637
thousand)

Notes andaccounts
payable trade

1,491(US$14,034
thousand)Concurrent
holding of
positions byofficers—

Acceptance ofconstruction
contracts(Note 1, 2)

1,143(US$10,758
thousand)Accounts
receivable- trade1,145(US$10,777
thousand)3.

Transaction terms and the policy to determine transaction terms
Transaction terms such as prices are determined through negotiation in each case based on a quotation as is the case with generaltransactions, as well as by reference to actual situation of the market.

(2)Business transactions between consolidated subsidiaries of the company filing the consolidated financial statements and related parties
No items to report.

3,931

37,001

—

—

—

4,742

3,931

37,001

25,923,467

25,923,452

25,923,452

Fiscal year ended
March 31, 2018
(Millions of yen)

Fiscal year ended
March 31, 2018
(Thousands of U.S.
dollars)

Net assets per share are calculated on the following basis.
Fiscal year ended
March 31, 2017
(Millions of yen)

Of the amounts stated above, the transaction amount excludes consumption taxes, while the balance at end of the fiscal year includes
consumption taxes.

2.

4,742

Amount not attributable to common shareholders
Profit attributable to owners of parent related tocommon stock
Average number of shares outstanding during theperiod (number of shares)—

Acceptance ofconstruction
contracts ofsaid company

Profit attributable to owners of parent

Total net assets

52,26055,042

518,091

117

136

1,280

(Non-controlling interests included in the above)

(117)

(136)

(1,280)Net assets attributable to shares of common stock

52,142

54,906

516,81025,923,456

25,923,409

25,923,409

Deduction from total net assets

Number of common stock used for calculation of net
assets per share (number of shares)

2.

Note concerning the parent company or significant affiliated companies

Financial Information(Subsequent Event)No items to report.

No items to report.

91

METAWATER REPORT 2018

METAWATER REPORT 2018

92

1.

[Supplementary Schedules][Schedule of Bonds]
No items to report.

[Schedule of Loans]
Balance as ofApril 1, 2017
(Millions ofyen)

Category

Balance as ofMarch 31, 2018
(Millions ofyen)

Balance as of
Balance as ofApril 1, 2017
March 31, 2018
(Thousands of U.S. (Thousands of U.S.
dollars)
dollars)

Averageinterest rate(%)

Due date

Short-term loans payable

284

269

2,673

2,532

2.70

—

Current portion of PFI andother project finance loans

825

833

7,765

7,840

1.10

—

Long-term loans payable

2,436

2,050

22,92919,295

2.66

January 14, 2026

PFI and other projects financeloans

12,382

11,549116,547

108,706

1.13

June 22, 2026 toNovember 30,
2033

Total

15,92914,703

149,934

138,394——(Notes)1.

“Average interest rate” is stated at weighted average interest rate on the balance of loans payable at the end of the fiscal year.

2.

Repayment schedule for long-term loans payable and PFI and other project finance loans (excluding current portion) per year for five years
subsequent to the consolidated balance sheet dateCategory

Due after one year
through two years(Millions of yen)

Due after two years
through three years(Millions of yen)

Due after three years
through four years(Millions of yen)

Due after four years
through five years(Millions of yen)

Long-term loans payable

269

269

269

444

PFI and other projects
finance loans

844

855

862

873

Due after one year
Due after two years
Due after three years
Due after four years
through two years
through three years
through four years
through five years(Thousands of U.S. dollars) (Thousands of U.S. dollars) (Thousands of U.S. dollars) (Thousands of U.S. dollars)Long-term loans payable

2,532

2,532

2,532

4,179

PFI and other projects
finance loans

7,944

8,047

8,113

8,217

Financial Information

Category[Schedule of Asset Retirement Obligations]
No items to report.

（1）The Company’s consolidated financial statements are prepared based on “Ordinance on Terminology, Forms, andPreparation Methods of Consolidated Financial Statements” (Ordinance of the Ministry of Finance No. 28 of 1976).
（2）The Company’s non-consolidated financial statements are prepared based on “Ordinance on the Terminology, Forms,
and Preparation Methods of Non-consolidated Financial Statements, etc.” (Ordinance of the Ministry of Finance No. 59
of 1963; hereinafter “Ordinance on Non-consolidated Financial Statements, etc.”)
The Company falls under a company submitting special financial statements, and therefore prepares its nonconsolidated financial statements pursuant to the provisions of Article 127 of Ordinance on Non-consolidated Financial
Statements, etc.
（3）The Company is carrying out special initiatives to ensure the appropriateness of its consolidated financial statements,
etc. Specifically, we have joined the Financial Accounting Standards Foundation and participate in trainings organized byaudit firms, etc., in order to develop a system to accurately grasp the content of accounting standards, etc., andappropriately respond to changes in accounting standards, etc.

93

METAWATER REPORT 2018

METAWATER REPORT 201894

Corporate information
Disclosure policies
Corporate Overview
1

Basic policy

5

Quiet period

Based on our corporate mission, we aim to be a signature

To prevent divulging closing information and to ensuregroup trusted by society through our continuous contribution to

fairness, the Company observes a quiet period from the day

it while meeting the expectations of our stakeholders with theafter the end of closing (including the quarterly end of closing)

purpose of accomplishing sustained development with society.

to the closing results announcement.

In accordance with this view, we strive to have management

During the quiet period, the Company cannot give any

with high transparency and reliability by disclosing theannouncement, provide details, news coverage, answers tocorporate information of our Group to the stakeholders andinquiries, etc. about the financial results and performancesociety in an appropriate, fair, and equitable manner on aforecast except information about a correction to the closing

timely basis. At the same time, we actively communicate with

forecast.

the stakeholders to enhance their understanding of our Group.
2

6

Future prospects

Information disclosure standards

The descriptions associated with future prospects among the

We disclose the corporate information requested to be

performance prediction, business strategy and goals, etc. that

disclosed in accordance with the laws and regulations such

our Group discloses may deviate from the actual result dueas the Company Law and Financial Instruments Exchange Act

to various factors because they are based on information we

as well as the rules laid down by the financial instruments

obtain at that time as well as certain assumptions judged as

exchange. We do so in the manner stipulated by each law orreasonable.

regulation.
In addition, even if the corporate information is not part of that7

requested by laws and regulations, we disclose it proactively

So that we can comply with the disclosure policy, carry out

as much as possible when we regard it to be useful for

appropriate information disclosure and enhance communication

stakeholders or society.

with stakeholders, we build an internal system and improve3

Method of the information disclosure

Improvement of the internal system

Company Name

METAWATER Co., Ltd.

English Name

METAWATER Co., Ltd.

Main Business Activities

Design and construction of equipment for water treatment plants,
sewage treatment plants, and waste treatment facilities;
design, manufacture, and sale of various devices; implementation of
repair work; provision of services including operation management.
Civil engineering work, building work, electrical work, plumbing work,
tile, brick and block work, machine and equipment installation work,
telecommunication work, water and sewage facilities work,
sanitation facilities work.

Establishment

April 1, 2008

Chairman and
Representative Director

Yasushi Nakamura

Number of employee

2,961

List of bases

Head Office:Hino Branch:
Nagoya Branch:

Main sales bases

Tokyo (Headquarters), Sapporo, Sendai, Yokohama, Nagoya, Osaka, Hiroshima, Takamatsu, Fukuoka

R&D Centers

Handa (Aichi), lchihara (Chiba), Chiyoda-ku (Tokyo)

Main group companies

METAWATER SERVICES Co., Ltd.*METAWATER USA, INC.*
Aqua-Aerobic Systems, Inc.*
Mecana Umwelttechnik GmbH*METAWATER TECH Co., Ltd.
SIC Co., Ltd.			

company rules.
Overseas bases*As of March 31, 2018, including the associated companies.

JR Kanda Manseibashi Bldg., 1-25 Kandasuda-cho, Chiyoda-ku, Tokyo 101-0041 TEL:+81-(0)3-6853-7300
3-1-30 Asahigaoka, Hino, Tokyo 191-0065		
TEL:+81-(0)42-589-6900
Nagoya Prime Central Tower, 2-27-8 Meieki, Nishi-ku, Nagoya, Aichi 451-0045 TEL:+81-(0)52-884-6800

Toriden-Shoji Co.
Akebono Engineering Co.
Water Next Yokohama Co., Ltd.*Techno Clean Hokuso Co.*
Aqua Service Aichi Co.**: Scope of consolidated statement

USA, Netherlands, Vietnam, Cambodia

We disclose corporate information requested to be disclosed
in accordance with the above laws and regulations based on amethod prescribed by each law and regulation. The regulationis also available on the corporate website.
With regards to the corporate information that is not part

Stock-related matters*As of March 31, 2018of that requested by the laws and regulations, we disclose

Stock Exchange listing		 First section of the Tokyo Stock Exchange
Industrial Classification：Electric Power and Gas. (code: 9551)

Status of dominant shareholders (Top 10)

it through the news media or corporate websites etc. in

Total number of authorized shares

70,000,000 shares

Name of shareholder

consideration of its importance and urgency.

Total number of issued shares

25,923,500 shares

Percentage ofshares owned(%)

NGK INSULATORS, LTD.

7,500

28.93

Fuji Electric Co., Ltd.

7,500

28.93

Breakdown of shareholders

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

1,418

5.47

Financial
institutions
16.11%JP MORGAN CHASE BANK 385632

1,107

4.27

Japan Trustee Services Bank, Ltd. (Trust account)

977

3.77

to inquiries etc.

Japan Trustee Services Bank, Ltd. (Trust account 9)

528

2.03

In addition, the opinions given by stakeholders through the

GOVERNMENT OF NORWAY

338

1.30

said communication will be shared within our Group and used

The Nomura Trust and Banking Co., Ltd. (Trust account)

309

1.19

CREDIT SUISSE AG, DUBLIN BRANCHPRIME CLIENT ASSET EQUITY ACCOUNT

305

1.18

Japan Trustee Services Bank, Ltd. (Trust account 5)

215

0.83

4

Communication after disclosing information

With regards to the disclosed information, we make ourbest effort to communicate with stakeholders throughannouncements, provision of details, news coverage, answers

Number of shareholders

Other domestic corporation
58.60%

4,434

Private & Others
5.85%

in future as part of reference data.
Financial instruments
business operators
0.55%

95

METAWATER REPORT 2018

Foreign corporation
18.86%METAWATER REPORT 2018

Corporate information

Number of shares
owned(1,000 shares)

96Corporate information

Map of bases as of March 31, 2018
We have approx. 40 domestic sales and service bases todeliver sophisticated customer services.

“META” in the corporate name “METAWATER” is a prefix representing“transcendence” or “transformation.”
It symbolizes our desire to be a company that evolves continuously to hand down “WATER,”
an indispensable resource, to people in the future generations.

Headquarters

OfficeSales/Service baseGroup company

The line vertically intersecting the logo in the center represents the role of
METAWATER and its advanced technologies and products.
The deep blue on the left symbolizes “water before purification” andthe clear blue on the right represents “water after purification and regeneration.”

Corporate Characters

Mae-chanTah-kunTo symbolize our corporate identities, we have mascot
characters called “Mae-chan” and “Tah-kun.”
The synergetic growth of “Mae-chan,’’ representing natural
water, and “Tah-kun,” representing purified water, symbolizes
the growth and symbiosis of METAWATER with the environment.

METAWATER USA, INC.
Headquarters
Aqua-Aerobic Systems, Inc.
Europe Representative Office
Rood Wit Blauw Holding B.V.

Issuing the “METAWATER REPORT 2018”

Mecana Umwelttechnick GmbHAs a good partner of the water supply and sewage industry, METAWATER Group contributes to the sustainability of the water supply and sewage systems
in cooperation with the local community. Further, METAWATER is proactively engaged in social contribution activities including environmental preservation
as a corporate citizen to realize a sustainable society and preserve the global environment. We have issued this report to communicate the entire picture of
our group in an easy-to-understand manner. Besides our corporate mission and business details, it offers comprehensive and concise information about ouractivities including the following: Financial information such as changes in performance and mid-term management plan for water management business infuture; and CSR activities not listed in the financial statements and non-financial information such as social contribution activities as a part of CSR activities.

• Period in the scope of reporting
Hanoi Representative OfficeCambodia Representative Office

The performance for fiscal 2017 (fiscal year ended March 2018) is the main scope of reporting. However, some events in this report occurred before or after
this period.

• Reference guidelines
ISO26000 (International Standard of Social Responsibility issued in November 2010)
Ministry of Environment: Environmental Reporting Guidelines (Version 2012)• International Integrated Reporting Council (IIRC): International Integrated Reporting Frameworks• GRI Sustainability Reporting Guideline Version 3.1 (G3.1), Version 4 (G4)
• United Nations Global Compact••

Group company
Liaison office97

METAWATER REPORT 2018

METAWATER REPORT 201898

www.metawater.co.jp/eng/

METAWATER Co., Ltd. : JR Kanda Manseibashi Bldg., 1-25 Kandasuda-cho, Chiyoda-ku, Tokyo 101-0041