METAWATER REPORT 2019
The Fiscal Year Ended March 2019

R&D Center Water Reclamation Technology Dept

Service Solution Division, Minami Kanto Service Group

Yutaka Kanza

Plant Engineering Div Water Reclamation Engineering Dept Gr 1

Hikaru Kozaki

Haruhiko Nakayama

I continue to look at things fromthe viewpoint of a partner.
So that I can assist customers andmaintenance operators.

I continue to interact.
So that I can build a relationship of trust.

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

I continue to pass down knowledge
and never stop learning.
So that I can make better designs.

Project Planning Dept Project Planning Gr 1, Group Manager

Plant Engineering Div Resource Reclamation Engineering Dept Thermal Treatment Gr

Shunjiro Morinaga

Management and Operations Overview

Continue,to make it sustainable.

I continue to expand my circle ofpeople and my knowledge.
So that I can hone my ability tomeet customers' needs.

I continue to doubt.
So that I can discover the truth.

I continue to challenge myself.
So that I can make METAWATER
technology the world standard.
International Business Division, Overseas Sales Department

Shintaro Seo

Ayaka Koyano

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.

I continue to give 100%.
So that I can fulfill our responsibility of
supporting infrastructure.

I continue to worry together.
So that I can solve customer issues,
together.

I continue to learn.
So that I can meet ourcustomers' evolving needs.

Plant Engineering Div
Resource Reclamation Engineering Dept Sludge Treatment Gr

WBC(Water Business Cloud) Center WBC Promotion Dept Project Promotion Gr

Product Center System Engineering Dept Information & Business Innovation Gr

Yukinori Hasegawa

Contents
1

Corporate mission

3

Current status of the water supply business

Keigo Iwano

Shuichi Sakamoto

Glossary
21

Sustainable creation of corporate value

43

SocialEPC

Design and construction of facilities and equipment

and contributions to society and the global

53

Governance

O&M

Operation and maintenance of facilities and equipment

7

Top management’s message

environment

61

Disclosure Policies

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 interview

23

Business highlights

62

Financial Information

PFI	Comprehensive implementation of facility design, construction, maintenance, repair, etc., utilizing the capital and know-how of private businesses.

15

The history and growth of METAWATER

27

Introduction to business operations

101 Corporate Information

DBO

An approach using the know-how of private businesses to comprehensively implement facility design, construction, maintenance, repair, etc.
An approach using the know-how of private businesses to comprehensively implement facility design and construction.

17

Performance highlights

35

METAWATER Group’s ESG

DB

19

METAWATER business developments

37

Environment

SPC

Companies whose purpose is to run specific business operations

PFI Act

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

Concession	An approach granting operating rights of public facilities that collect usage fees to a private business while the public entity maintains ownership.

1

METAWATER REPORT 2019

METAWATER REPORT 20192

Current status of the water supply businessTakuya Urakami
We are faced with various challenges regarding water and environmental infrastructure.
To overcome these challenges, we must undertake water supply business operations through public-private partnerships.
Through this we can pursue sustainability, ensuring that we can use safe, clean water reliably and indefinitely.
We are the ones responsible for future generations.

Professor of the Kindai University Faculty of Business Administration. Ph.D. in Business Administration.
Born in Amakusa City, Kumamoto Prefecture. Completed his doctorate at the Graduate School ofBusiness Administration, Kobe University. Assumed current position in April 2013 after working
as a contract researcher at the Osaka Prefectural Institute for Advanced Industry Development
and as a lecturer for the Faculty of Business and Economics at Kindai University. Specializes in theeconomics of public utilities. Council member for the Ministry of Health, Labour and Welfare, theMinistry of Land, Infrastructure, Transport and Tourism, and for many local governments.

Current state and issues facing water infrastructure

people by 2063 before finally falling to approximately a half ofFrom what we have seen so far, it's hard to be optimistic

There is no doubt that our waterworks are the mostin Japanpeak population around 2100.

with regard to the reality of the water supply business inindispensable piece of social infrastructure in our lives.

The history of modern Japanese waterworks began in

But this is not the only problem Japan is facing. As you areJapan. Facilities constructed during periods of high economic

The waterworks industry has moved from the construction

Yokohama, in 1887. It was designed to prevent water-borne

well aware of, the tremendous amount of damage caused

growth are already aging. Increases in future investment

era in the 20th century, to the maintenance era in the 21st

infectious diseases and fires, with municipalities in mind as

by the frequent occurrence of natural disasters in recent

are expected due to planned improvements. And a certain

century. What should we do to "protect" rather than "create"

the suppliers. Since then, the water supply business has beenyears. Strong lifelines need to be built to counter the majoramount of investment is also required to make the facilities

our water infrastructure? In today's rapidly changing socio-

operated on the principle of independent profit as a local public

earthquakes exceeding maximum seismic intensity of lower

resilient to natural disasters. However, in the future revenues

economic environment, advanced management capabilities

enterprise under the principles of municipal management.

6, massive typhoons, guerrilla rainstorms, and other natural

will decrease due to the declining population. Currently, theare required to manage the water supply business. We need

The spread of waterworks expands rapidly with high economic

disasters occurring almost every year.

expenses that should be borne by the current generation areto think deeply on this in order to ensure the water supply

growth. What was just 32.2% in 1955 exceeded 90% in the

Let's take a look at management of the water supply business.

being postponed to the next generation in order to reducebusiness is sustainable and to fulfill our responsibility to future

1980s, and that number reached 98% by the end of 2017.

As of the end of FY2017, there were 1,347 water supply

water prices.

generations.

Considering that approximately 70% of the total land area ofcompanies in Japan (those supplying water to at least 5,000

Japan is comprised of forests, it is acceptable to think that apeople). Many of these companies are profitable. This does

national public water supply has basically been achieved.

not show that management is stable. To start, water supply

In entering the 21st century, Japan is facing major changes tobusinesses are operated as local public enterprises on theits social structure. Needless to say, declining birthrates andprincipal of independent profit. Construction and improvementa shrinking and aging population are among these. Accordingof facilities are primarily funded through internal funds (internal

to the National Institute of Population and Social Security

reserves) and new debt (corporate bonds). It's easy to see that

Research, the total population of Japan began to decline after

if the balance of dept (corporate bonds) becomes too large,

peaking in 2008. This rate of decline will accelerate in theit can cause a crisis for future management. In order to keep

future, and the population is expected to fall below 90 million

management stable, sufficient internal funds must be held.

Water supply business in a society with a declining population
Revenue earning water has been decreasing since hitting its peak in 2000, as changes in Japan's population and the spread of water-saving
equipment has led to lower amounts of water being used per person. By about 2065, this revenue earning water will drop to approximately 60% of
its peak amount.
● In principle, the water supply business is operated through water charges (independent profit system), but revenue decreases along with adeclining population, and so the management situation is becoming ever more severe.
●(Thousand m3/day) Revenue earning water［
45,000(hundred million yen)

Investment in waterworks and water supply

Population with access to piped water (%)

15,000

the temporary increase in expenses when a disaster occurs,

16,00080

and also allow management to continue even if there is no12,000

60

8,000

40

But in reality, many companies are far from achieving sustainable

4,000

20

management practices, instead reducing the number of staff

1963

1973

1983

1993

METAWATER REPORT 2019

2003

2013

0
(Year)

necessary in order to reduce the burden on the current generation.

Low (reference)］

Household consumption［

Actual value

Estimated value］(ℓ per person/day)
350

1998
243ℓ per person/day

300

2065
22 million m3/day

250

0

1960

200

2015
227ℓ per person/day

150

Household consumption

5,000

generated to secure these internal funds.

investments in improvements, and borrowing more than isHigh (reference)2015
36 million m3/day

10,000income from charges for a fixed period. Profit (surplus) must be(reducing labor costs) to reduce water prices, postponing

Estimated value

20,000Estimation method

1953

Source: Ministry of Health, Labour and Welfare

3

25,000100

Revenue earning water

30,000against risks such as natural disasters. They compensate for

20,000035,000investment, but also as an important method for protecting

Actual value

2000
39 million m3/day

40,000

These internal funds serve not only as a source of future
Changes in coverage of water supply system and investment

Management and Operations Overview

Bringing water and environmental infrastructure
to the next generation through public-private partnerships.

1970

1980

1990

2000

2010

2020

2030

2040

2050

2060

2070

2080

2090

2100

2110 (Year)100(1) Population being supplied with water: Calculated by multiplying Japan's estimated future population (2017 estimate) by the rate of population served by water supply (2015 actual
results: 94.4%).
(2) V olume of revenue earning water: Estimated by separating into household and non-household use.
Revenue earning water from household use: Household consumption × population being supplied with waterSince it is difficult to grasp trends of waterworks exclusively for groundwater use, future economic trends, etc., revenue earning water from non-household use is assumed tochange in accordance with that of revenue earning water from household use, with the ratio for non-household use set at 0.310 that of household use.
(3) The high and low levels are the results of estimations when Japan's estimated future population is changed to low death/high birth rates (high), and high death/low birth rates (low).

Source: Ministry of Health, Labour and Welfare

METAWATER REPORT 20194

Current status of the water supply businessMeasures for strengthening water infrastructure

Water Supply Act and points of revision
The biggest factor leading to the revision of the Water Supply
Act was that as an industry, Japanese waterworks had reacheda stage of maturity. The percentage of the population withaccess to piped water has been almost flat since 2000, andPromotion ofregional collaborations

Promotion of
public-private partnerships

Prefectures are
the facilitators

Introduction ofconcessions

the population being supplied with water has been steadilydecreasing as Japan's total population decreases. Water

establishes basic policies to strengthen infrastructure andfacilities constructed during periods of high economic growth

prefectures establish plans for strengthening water supply

are already aging, and the time for full-fledged renovation andinfrastructure as well as set up councils to promote regional

reconstruction has arrived.

collaboration. The act has also defined that business operators"Creating" and "maintaining" are two entirely different things.

are obliged to create water supply facility ledgers, and that

The first thing we must do is change our way of thinking.

they should create and publish future income and expenditure

On top of that, Japan is now in a society with a declining

prospects. Third, the introduction of concessions is now

population. How will maintenance be carried out as thepossible as a new form of public-private partnership. While

population decreases, the demand for water declines, andthe granting of operating rights themselves are a nationalless water revenues are received? "Advanced management

permission, creative originality is expected from the local

capabilities" are required.

governments in determining the scope of the operating rights,

As mentioned earlier, there were 1,347 water supply

determining usage prices, etc.

companies in Japan as of the end of 2017. Most of those are

Japan's water supply system faces an extremely difficult

small-scale businesses with less than 10 employees. In thissituation. Regional collaborations and public-private

rapidly changing socio-economic environment, how can small-partnerships are key to ensuring that a water supply industry

scale businesses exercise advanced management capabilities

with such a large number of small-scale businesses canwhile also taking on their daily duties? In addition, a decline

continue to be sustained for the next 50 to 100 years. Thesein population means a decline in the number of municipal

regional collaborations and public-private partnerships can be

employees. The water utilities run by municipal management

effective in helping to create an organization that demonstrates

are no exception. The number of people employed in the water

advanced management capabilities.

and has many distinctive areas with different historical andThese range from the essential to the frivolous. Historically,

cultural backgrounds. I want to see the private sector propose

there have been many services that have improved greatly withpublic-private partnerships that are ideal for each region.

the transition from the public to the private domain.
In order to rid users of their "somewhat uneasy" mentality, theProposal for "providing a stable supply of safe water

government needs to actively send out correct information,

for the future"

allowing users to gain an understanding of public-private

The "basic policies" established by the Water Supply Act clearlypartnerships. On top of that, water utilities need to also

state the responsibilities of residents who are waterworks

recognize that public-private partnerships are not just a means

users. They state that residents should be aware that they

for reducing costs, but are an effective way of ensuring theare participating in the management of the water supply, andsustainability of our water supply, and as such they should bethat they should understand that financial resources need to

exploring options for desirable partnerships between the public

be obtained through water charges for the maintenance andand private sectors.

planned improvement/renovation of facilities.

With this uncertain future on the horizon, I believe that the

To ensure our children and grandchildren can use therole expected of private companies related to the water

waterworks safely and with peace of mind, we, the current

supply business is to greatly "complement the public". As

generation of users, need to understand everyone's roles

manifested in the previous opposition to privatization, the idea

regarding the water supply and make sure we bear the costs

that the water supply should be publicly managed is deeply

through paying the appropriate water usage fees.

rooted in Japan. On the other hand, the small-scale water

Responsibility for ensuring the sustainability of our watersupply businesses that maintain the framework of municipal

supply does not lie only with the municipalities, nor is it

management we have now can lead to failure if left as is. The

entirely on the shoulders of the private sector. I believe that an

power of the private sector, which makes up for shortages ofindispensable part of realizing a safe and secure water supply

human resources and has advanced management capabilities,

in the future lies in us, everyone who uses the water supplyis essential in making a sustainable water supply a reality.

system in any way, truly coming to grips with the fact that we

From north to south, Japan stretches across a vast distance,

are all responsible.

Management and Operations Overview

Background to the enforcement of the revisedand services all around us are offered by private companies.

supply business is on a downward trend, and it is difficult

5

to secure the employees they need, let alone pass on their

Expectations of the private sector in the watertechnology and know-how.

supply business

It was under these circumstances that the Water Supply Act

In the water supply field, the abilities of the private sector

was revised at the end of 2018. I would like to point out three

have already been utilized across a wide area. It would notthings. First, the act has declared that the waterworks industry

be an exaggeration to say that without the power of the

had shifted from the construction era to the maintenance era.

private sector, our water supply system would not be possible.

In Article 1 of the Water Supply Act, the aim of waterworks has

Nevertheless, when the Water Supply Act was revised at the

been changed from "planned maintenance" to "strengthening

end of 2018, intense discussions against privatization were

infrastructure". Second, the responsibilities of the national

held. It is thought that users feel "somewhat uneasy" about

government, prefecture, and business operator have beenleaving water supply in the hands of private companies.

clarified. The act has defined that the national government

However, stepping back and taking another look, many products

METAWATER REPORT 2019

What is a concession agreement?
Many water utilities have been operated by public entities.
Concessions in the water supply business are agreements in which longterm operating rights are granted to a private business while approval of
business items and facility ownership remain in the hands of the public. Private
businesses permitted by the Minister of Health, Labour and Welfare can operate
the business using fees collected from users as a source of funds. This is
expected to contribute to a sustainable water supply business, using operating
revenues to repay existing debt in full and reducing operating expenses andimproving service levels by utilizing the know-how of the private sector in acomprehensive range of areas not seen before.

Water supply service

Final responsibility insupplying water

Users
Water prices
Operating rights

Operator (private)
Permission

Facility maintenance andmanagement services
Monitoring

Ownership

Water utility (public)
Approval

METAWATER REPORT 20196

Top management’s message

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

time while ownership of the water supply business and water

To realize our long-term vision, METAWATER will

infrastructure are maintained by the local government.

continue to take bold measures to respond to the

Since the enforcement of the PFI laws in 1999, approximately

rapidly changing environment.

60 PPP applications have been accepted nationwide regarding

In the future, major environmental changes are expected,

the water and sewage field. The METAWATER Group has taken

including a further increase in the number of projects forpart in about half of those projects, handling everything fromfurther comprehensiveness and a growing demand forfacility design and construction to operation, maintenance,

wider area management represented by concessions. In

and management. Up to now we have worked on a number ofanticipating these changes and strengthening our corporate

further comprehensiveness projects, including those supporting

structure to realize our long-term vision*3 aiming for sales

management and planning for local governments, feeof 200 billion yen, in April 2018 the METAWATER Group

collection, and support for residents, etc. In order to continue

formulated the "Mid-Term Management Plan 2020", whichwith the steady activities we have been engaged in during

will end in March 2021.

this period and to be able to take on wider area management

Under the "Mid-Term Management Plan 2020", we will

projects, we will be adopting the "three centers concept"

implement "strategic development investments" in addition tocentered around the "Training center for facility operators",

conventional development investments, and are also working on"Knowledge center", and "Supply center for parts". In addition,

development of products, solutions, and new businesses that are

we will work to reduce construction costs and improve

essential for medium- to long-term growth. In terms of businessmaintenance efficiency through the incorporation of cutting-strategy, we are capturing replacement demand and reinforcing

edge technologies such as AI* and ICT* . Furthermore, we are

the domestic EPC business, while at the same time steadily

1

In April 2008, the METAWATER Group was established as

management through public-private partnerships (PPP), andactively promoting the disclosure of information and aiming forincreasing a stock business, the domestic O&M business.

the first comprehensive engineering enterprise in Japanlegislation is currently underway to promote this. The Grouphighly transparent business operations.

We are also working to expand the domestic PPP business,engaged in the water and environmental fields. Since then,believes that Japan, which has experienced the Great East

which is positioned as a field for growth, and reinforce andwe have worked as a corporate group engaged in the social

Japan Earthquake, can create a sustainable water andexpand overseas business foundations, through regional andinfrastructure indispensable to industries and people's lives,

environmental infrastructure, and has been exploring how

partnership strategies making use of our results thus far.

promoting the fusion of mechanical technology, electricalbest to achieve that over time. Finally, we are ready to move

Additionally, we are promoting work-style reforms, creating

technology, ICT, and maintenance know-how, contributing to

on to specific measures. We will continue to undertakesociety through water, sewage, and resource environment

sincere efforts in order to be a corporate group confidently

businesses. At the same time, we are also engaged in CSR

entrusted with the social infrastructure of the future.

activities such as working to conserve the environment and72

contributing to local communities.

In response to the revised Water Supply Act, we will continue

Much of Japan's water and sewage infrastructure wasto undertake steady efforts to gain the trust of citizens.

developed during a period of high economic growth, andIn December 2018, the "revised Water Supply Act" wasthe aging of these facilities and equipment has become

enacted. In this revision, the aim of the act was changeda serious issue. Another major issue we're facing is thefrom "planned maintenance" to "strengthening infrastructure"

recent increased occurrence of natural disasters such as

regarding water infrastructure. Additionally, prefectures

earthquakes, heavy rainstorms, and typhoons. However,

have become responsible for "wider area management", andlocal governments that plan and operate water and sewage

local government and other business entities are obliged to carrybusinesses are having problems of their own, such as decreased

out "maintenance of ledgers" and "appropriate maintenance andincome due to a declining population and a shortage of engineers.

repair". As another option for improving the efficiency of business,

In order to solve these problems, business operations

concession agreements can now be established as well, which allow

urgently need further comprehensiveness and wider area

operation of the business to be outsourced for long periods of

METAWATER REPORT 2019

Main points regarding the revised Water Supply Act
1 T he aim of the Water Supply Act has changed from "planned

maintenance" to "strengthening infrastructure" on thepremise of renewal, maintenance, and operation of thewater supply business
2 The promotion of "wider area management" is the responsibilityof prefectures, and the "maintenance of ledgers" and"appropriate maintenance and repair, including inspection"
are obligations of the local government
3 T he concept of water charges has been changed to "fair andreasonable to ensure sound management"
4 The "Water Facility Operating Rights Granting Permit Method"(concession agreement) was established as a private-public
partnership method

Management and Operations Overview

METAWATER will continue toundertake steady efforts to earn
the confidence and trust of
citizens while also taking boldmeasures to respond to
the rapidly changing environment.

a work environment in which excellent human resources
will constantly join the company and enabling growth andinnovative work.
The environment in today's Japan is changing drastically
due to a declining population, frequent natural disasters,
etc. If you look overseas, the number of people without
access to drinking water has been rapidly increasing, andnumerous lives have been lost due to unsanitary water
environments. Under these circumstances, the technology,know-how, human resources, and information that the
METAWATER Group has available are indispensable.
We are making continuous efforts to ensure that the safe
and secure water environment Japan currently enjoys will

*1 AI : Artificial Intelligence; technology that gives computers recognition and inference capabilities
similar to that of humans*2 ICT : Information and Communications Technology related to computers and the Internet*3 Refer to “Achieving our long-term vision” (P15-16).

be available for our children, and their children as well. We
will also expand our efforts to overseas countries requiring
a better water environment.

METAWATER REPORT 20198

Top interview

Management and Operations Overview

Achieving our long-term vision
In May of last year, we announced the "Mid-Term
Management Plan 2020". What future challenges will
METAWATER face in starting these new initiatives toachieve its long-term vision?
We invited professional analyst Shusaku Nishikawa tointerview President Nakamura.

Shusaku Nishikawa
Graduated from the University of Tokyo Facultyof Law in 2008 and joined the Daiwa Institute of
Research Ltd. as an analyst. In 2013, he was put incharge of the power and gas sectors. In 2014, he
was put in charge of the power, gas, and oil sectors.
In August 2016, he began covering METAWATER.

Top Interview

9

Yasushi Nakamura

Mr. Shusaku Nishikawa

METAWATER Co., Ltd.
President and Representative Director

Daiwa Securities Co., Ltd.
Senior Analyst, Equity Research Department"Mid-Term Management Plan 2020"

Please summarize the fiscal year ended March

It seems as though current business performance

2019, the first year of your "Mid-Term Management Plan

is steady, and that the probability to achieve theEstablishing a business structure that can realize our long-term vision

2020" (FY ended March 2019 to FY ending March 2021).

"Mid-Term Management Plan 2020" is increasing.

Key measures

For the fiscal year ended March 2019, sales increased

What are your thoughts on this?

thanks to strong domestic EPC, O&M, and PPP performance.

The "Mid-Term Management Plan 2020" has final year

1 Expansion of strategic development investments

2 Strengthening and expanding business

Operating profit, ordinary profit, and net profit increased(ending March 2021) targets of sales of 128 billion yen anddue to improved gross profits from an increase in sales, all

Enhancing development of products, solutions, and new businesses
that are essential for medium- to long-term growth

Promoting efforts to strengthen core areas and expand growth areas

an operating profit of 9 billion yen.

of them exceeding the initial plan.

This plan is based on a long-term vision of achieving sales ofIn terms of orders received, domestic EPC performed

200 billion yen. This must be achieved after implementing

well, becoming the second highest recorded sales after

our "strategic development investments", which are a 40%

the previous year's record high. The order backlog, which

increase over the past three years compared to traditional

indicates the potential for future growth, was able to reachdevelopment investment, as well as our normal developmenta record high as well.

investment, such as new product development and the

The difficulty faced since 2016 regarding sales and revenue due

incorporation of cutting-edge technology such as AI and ICT.

3 Engaging in continued ESG initiatives

to long delivery times and an increase in large-scale projects

Looking at our current situation, our order backlog as ofcontinues, but during this period we have made steadyMarch 31, 2019 was a record high 142.4 billion yen thanks

Promoting activities that contribute to the environment and local communities,
as well as actively strengthening corporate governanceefforts to reduce costs and improve project process management

to a trend toward larger projects and longer construction

accuracy using ICT. From FY2019 on, we should be able to escapeperiods. If we can make steady progress and complete

the slump we've been experiencing, as we expect long-term

these orders, and reduce the costs of design, construction,delivery projects to begin contributing to sales, efforts tooperation, and maintenance, we believe this will increase

reduce costs by completing construction work to progress, etc.

the accuracy of us achieving our goals.

METAWATER REPORT 2019

Promoting a management structure based on economies of scale toenable more comprehensive and wider area business operations● Reducing construction costs by adopting leading-edge technologies
such as AI and ICT, streamlining maintenance, and improving safety● Developing topline products and new businesses● Creating added value through work-style reforms

Plant engineering business

Service solution businessCore areas

Reinforcement ofdomestic EPC business

Reinforcement ofdomestic O&M business

Growth areas

Reinforcement and expansion ofoverseas business foundations

Expansion ofdomestic PPP business●

Promoting the reduction of environmental burdens andcontributing 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 communication with stakeholders●

Goals of the Mid-Term Management Plan
(Consolidated)

FY Ended March 2019

FY Ending March 2021

Orders received

123.8 billionyen

140 billion
yen

Sales

117.3 billionyen

128 billion
yen

Operating profit

7.6 billion
yen

9 billionyen

Net profit

5.2 billionyen

6.2 billion
yen

ROE

9.1%

10.0% or more

(Results)(Target)METAWATER REPORT 201910

Top interview

the efficiency of operations and management, which up

billion yen in the long-term vision?

to now has relied on people's experience and intuition.

METAWATER Group's long-term vision is to achieve sales ofSuch systems will include "wide-area monitoring" of data

200 billion yen for the 20th anniversary of the company (yearsuch as the operational status of each facility, water level,

ending March 2028).

water quality, water pressure, etc., and optimizing "asset

Sales for the French company Veolia, considered one of the

management" by consolidating data such as operations,world's largest companies in the water business, is about 3

failures, and maintenance information of facilities andtrillion yen, while the French water company Suez has sales

equipment owned by local governments.

of 1.4 trillion yen, and the UK's Thames Water has sales ofIn the future, advancement of AI and Cyber Physical300 billion yen. The METAWATER Group is currently ranked

Systems (CPS)* 1 will allow us to predict the rainfall andabout 30th in the world, but if our sales can reach 200

flow of rainwater in a region, making it possible to madebillion yen, we will enter the top 10.

advanced judgments and giving instructions such as where

In a few years, a cycle will come where demand will

and in what order sluice gates should be closed so that we

increase for the renewal of facilities and plant equipment

can control the flow of water into equipment.

we delivered in the early 2000s. In addition, bids will

In addition, each local government has different

increase for projects taking advantage of PPP and PFI, suchcircumstances depending on location, such as mountainous

as those represented by concessions, and M&A will beareas, beaches, river basins, urban areas, rural areas, andrequired both in Japan and overseas.

climate and weather as well, such as if it is a cold or warm

At that time, it will be important for us to be prepared

area, if there is heavy snow or rain, etc. Hence, we want tofor making new proposals and establishing businessincorporate the concept of "resilience", that is, recovery andmanagement systems unique to our company so that we

restoration, into the infrastructure.

can achieve our long-term vision.

One thing I realized after the Great East Japan Earthquake■ Promoting a management structure based on economies of scale to enable morecomprehensive and wider area business operations
In order to respond to the increasing need for further comprehensiveness and wider area management, the ICT platform will
be further expanded, and various systems will be constructed, including a system for training operators in charge of operating
equipment in each region, a system for supporting the accumulation, sharing, and handing down of project operations
knowledge for the different entities in each region, and a system unifying the procurement and supply of repair parts, etc.

Engineering functionality
Design and construction

Training center for
facility operators

Management and Operations Overview

What is the significance of having sales of 200

Supply center for parts

BCP method (tentative name)Concepts for design, construction, operations, and maintenance centered
Procurement
around quick recovery in the event of a disaster
Training the operators responsible forCentralization of procurement and supply
Knowledge center
equipment operation in each regionof repair parts, etc.

Operation and maintenanceOperation
Supporting the accumulation, sharing, and handing down of project
operations knowledge for the different entities in each region

People / Information / Goods

in 2011 was that there is no infrastructure that will neverPublic-private partnerships (PPP) are a growing

fail. Additionally, heavy rains and floods in western Japan

area and are expected to intensify competition.

during the summer of 2018 resulted in tremendous damage

Please describe what measures you'll take to differentiate

to the water infrastructure for the various regions affected.

yourself in the future and to secure profits.

That is why an important point in the philosophy for

As PPP and concession projects increase, numerous companies

infrastructure development that we are currently working

will enter the field and competition may increase. However,on should be to "think about how quickly we could recover

An ICT platform for sharing information inreal time, as well as for analyzing andutilizing collected information

we're striving to improve profitability by promoting the threecenters concept, operating using AI and ICT, streamlining
maintenance and management, and reducing costs.

Facility A

Facility D

The three centers concept is centered around the "Training
center for facility operators", "Supply center for parts", andFacility B

Facility C"Knowledge center", which are bases for educating local
operators, simplifying procurement by sharing necessary

Response training in the eventof a major earthquake

parts, and improving operational efficiency by sharing
knowledge, experience, and know-how, respectively.
Through these, we are keeping all of our water andenvironmental infrastructure data stored in the WBC(Water Business Cloud) and building systems to improve

11

METAWATER REPORT 2019

Training on sharing information between ourhead office and the Kyushu Office using videoconferencing systems and the WBC

Training center for facility operators

Knowledge center

Supply center for parts

Currently training human resources responsible forfacility operation throughout the country. Began
constructing a universal design for daily inspections
so that new operators can perform complex
inspection tasks efficiently.

The "Innovation center" was established on
April 1, 2019. Under that umbrella, "knowledge
center" functionality has been established toaccumulate, share, and hand down project
operations knowledge.

The "Supply center for parts" promotes thecentralized organization and management ofparts information, allowing the optimization andsharing of parts held.

*1 Services and systems that analyze events traditionally dependent on experience and intuition,using them for effective operation

METAWATER REPORT 201912

Top interview

water- and sewage-related investments equal about 40"ensure availability and sustainable management of water

it is important to consider drinking water (water supply)

to be robust, but for plant design and development in thebillion dollars a year. Many of the facilities there are quiteand sanitation for all ", and the "for all" part of that in particular,

and sanitation (sewage). As our business expands, wefuture, we will focus on resilience, differentiating ourselves

old, giving us a lot of room to introduce our own equipment

resonates deeply with us. The population with access to piped

are confident that we will be able to contribute to theand reducing costs.

and facilities. Up to now, we have struggled in the U.S. duewater in Japan is 97.9% (as of the end of 2016), and those with

development of a prosperous and sustainable society.

to different business customs compared to Japan, but withaccess to a sanitation system is high as well at 90.9% (as of

Additionally, with regard to "ESG"* 2 which have recently

AAS at the center, I feel that we can now sketch out new

the end of 2017). Globally, 2.1 billion people (about three out

been attracting attention, we are actively engaged inwhich is another growing business?

strategies for growth.

of every 10 people worldwide) do not have access to safe

activities to reduce our environmental impact and contribute

For overseas business, we believe that developing U.S.

On the other hand, the demand for water supply facilities

water at home, and 4.5 billion people (6 out of every 10) do not

to the community, which I think contributes to SDGs as well.

operations is our top priority. In January 2016, we madeis also increasing in emerging countries. In places such as

enjoy proper sanitation with regard to using the bathroom.

Going forward, we will continue to operate our business

the U.S. water treatment engineering company Aqua-

Asia, we are promoting initiatives related to infrastructure

That is why our goal is to ensure access to clean water andcontributing to the creation of a better society throughAerobic Systems (AAS) a subsidiary. As a result, in addition

development projects using Official Development Assistancesanitation for all. We thus want to create a place wherecollaborations with local governments, citizens, and partner

to gaining a strong sales channel covering the entirety of(ODA). Overseas, there are several major companies thateveryone can continue to live comfortably and with peace ofcompanies. Thank you everyone for your continued support.

the United States, we have also strengthened our productprovide everything from water infrastructure facilities tomind. It is our belief that these efforts can only be achieved

lineup in order to meet a wider range of customers' needs.

operation services, and companies in China and Souththrough partnerships with partner companies, citizens,

The U.S. is a large market with numerous competitors, andKorea are expanding their businesses leveraging low costs.

local governments, and local companies. The nature of

Our aim is to expand business by taking full advantage ofour business lends itself to social and environmental

being "Japanese company-esque", something that can only

contributions. We are currently looking into specificbe achieved by Japan and our experience with the Great

initiatives that take advantage of METAWATER's unique

East Japan Earthquake.

abilities in order to achieve these three SDGs.

What is the outlook for overseas business,

Management and Operations Overview

from a disaster". Infrastructure equipment is often required*2 Environmental, Social, and Governance.

SDGs the METAWATER Group is focusing on
Mobile ceramic
membrane filtrationequipment

56% of Japanese companies are contributing to"Clean Water and Sanitation"

Delivering mobile water purifiers to emerging countries
in Asia, Africa, etc., ensuring a safe water supply evenin the event of a natural disasterW h a t c a n y o u t e l l u s a b o u t M E TAWAT E R ' spolicies regarding the Sustainable Development

When asked about what SDG-based initiatives Japanesecompanies are currently taking and which of the 17 goals they
are focusing on, results were similar to last year's survey, with
56% working toward "6. Clean Water and Sanitation" (thehighest of all contributions). Following that was "9. Industry,Innovation, and Infrastructure" at 51%, and "7. Affordable andClean Energy" at 35%.
Source: Keizai Koho, June 2019 "Questionnaire Regarding SDGs"

Goals (SDGs) proposed by the United Nations?
Taking into account business characteristics and social
missions, the Group is focusing on achieving three of the 17
SDGs: "6. Clean Water and Sanitation", "11. Sustainable Cities
and Communities", and "17. Partnerships for the Goals".
We specialize in water and the environment, and so Goal 6,13

METAWATER REPORT 2019

Finally, do you have any message for shareholders,investors, and other related parties?
We are engaged in work to provide safe water not only tothose in Japan, but to everyone all throughout the world.
When thinking about the future development of the world,

METAWATER REPORT 201914

The history and growth of METAWATER

Core areas
In the future, major environmental changes are expected in the domestic water and sewage market, including a further increase in thenumber of projects for further comprehensiveness and a growing demand for wider area management represented by concessions. In

Expansion of domestic PPP business,overseas business foundations

2019 to FY ending March 2021) to strengthen our corporate structure. For the "Mid-Term Management Plan 2020", we are capturing

Service solution business

Reinforcement ofdomestic EPC business

Reinforcement ofdomestic O&M business

Reinforcement and expansion ofoverseas business foundations

Expansion ofdomestic PPP business

Reinforcement of domestic
EPC and O&M businesses

Growth areas reinforcement and expansion of

anticipating these changes, in April 2018 the METAWATER Group formulated the "Mid-Term Management Plan 2020" (FY ended March

Plant engineering businessJapanese demand for renewal of water and sewage facilities and reinforcing the domestic EPC business, while at the same timesteadily increasing a stock business, the O&M business. We are also working to achieve our long-term vision by expanding the domestic

2,000"Mid-Term Management Plan 2020"

PPP business, which is positioned as a field for growth, and reinforcing and expanding overseas business foundations through regional(FY ended March 2019 to FY ending March 2021)

and partnership strategies.

Targets (consolidated)

Changes and targets for sales

Exceeded

100 billion yen

Listing on theFirst Sectionof the TSE

Started reporting
consolidated
financial statements

Units: (hundred million yen)
Sales in growth areas (consolidated)

140 billion
yenbillion● Orders received 128 yen● Operating profit
9 billion
yen● Sales(Dec. 2014)

Sales in basic areas (consolidated)
Non-consolidated sales

1,123
861

932

931

1,055

1,069

928

1,117

1,031

FY ended March 2009 FY ended March 2010 FY ended March 2011 FY ended March 2012 FY ended March 2013 FY ended March 2014 FY ended March 2015 FY ended March 2016

Manufacturer

General engineering company

1,109

1,173

● Net profit● ROE

Management and Operations Overview

Achieving our long-term vision

6.2 billion
yen
10.0％or more

1,250 1,280(plan)(forecast)Long-term vision

FY ended March 2017 FY ended March 2018 FY ended March 2019 FY ending March 2020 FY ending March 2021

Supporter of business operations

Company providing total solutions

History

2008

2009

2014

2015

2016

2018

April

July

January

June

AugustApril

September

April

January

March

METAWATER Co., Ltd. was establishedin a merger between NGK Water
Environment Systems, Ltd. and Fuji
Electric Water Environmental Systems
Co., Ltd.

Environmental business of Kurimoto
Technos was transferred to METAWATER

METAWATER USA, INC. was establishedin the United States as the first overseas
subsidiary of our group
March

Undertaking capital increase of
System IO Co., Ltd. an affiliatedcompany of Nihon Suido Consultants,Co., Ltd.

Partnership in capital and business tieup with Rood Wit Blair Holding B.V. (theNetherlands) by undertaking third-party
allocation of shares

METAWATER TECH Co., Ltd. wasestablished to conduct maintenanceand management of water andwastewater facilities

METAWATER collaborates withNTT DATA in the services field
for the water and wastewaterbusiness

Converted Aqua-Aerobic Systems,
Inc. (AAS), a U.S. water treatment
engineering company, into a wholly
owned subsidiary

Partnership in capital and businesstie-up with SkySeeker Co., Ltd. by
undertaking third-party allocationof shares

Domestic water, sewage, andenvironmental business partnershipwith Suido Kiko Kaisha, Ltd.

Business partnership with Kokusai Kogyo
Co., Ltd. in domestic and international
supply water/wastewater businesses.

October

Established HyBrid Chemical Co.,
Ltd. in the chemical business basedon joint investment with Tsukishima
Technology Maintenance Service
Co., Ltd., a subsidiary of Tsukishima
Kikai Co., Ltd.

April

Business partnership with PWN
Technologies B.V. (the Netherlands)

2011
April
A new business called the Water
Business Cloud (WBC) was launchedto support the water and wastewaterbusiness

15

2013

METAWATER REPORT 2019

Head office relocated to Kandasudacho, Chiyoda-ku, Tokyo

Started providing the "Smart Field
Service", a water and sewage
infrastructure management service,in collaboration with Fujitsu Ltd.

December

October

The Group was listed on the First
Section of the Tokyo Stock Exchange

Established investment quotas forventure companies, etc.
DecemberStrengthened strategic alliancewith the Dutch company PWNTMETAWATER REPORT 201916

Performance highlights

Summary of operating results for the fiscal year ended March 2019■

Profitandloss■‌Since the fiscal year ended March 2016, sales have not increased and profit levels have declined due to long delivery times,
an increase in large-scale projects, a delay in the timing of recording sales for certain projects, etc. However, the orderbacklog increased, reaching an all-time high for the fiscal year ended March 2019, building a foundation for medium- tolong-term growth.

Operating profit / Operating profit margin

Service solution
business

51.8

Plant engineeringbusiness

65.5

billionyen

117.3

Operating profit

billionyen(hundred million yen)60

44.2 %

Sales(hundred million yen)
1,500
1,200
900

Sales

1,172
1,069

1,031

7.7

5.2

117.3

1,117

1,316
1,109

28
5.7

76

67

6.5

’15/ 3’16/ 3’17/ 31,173

900’18/ 3

Order backlog

1,359
939

’19/ 3

142.4

1,500
1,200

1,072

owners of parent

70

7

60

6

250

6

40

4

30

0

0

0

1,424

2,000

1,152

’16/ 3’17/ 3’18/ 3

5

4.4

3.5

4
3
2

’15/ 3’16/ 3’17/ 3

Total assets’18/ 3’19/ 3

41.7

39.8

0

’19/ 3

1,209

1,143
478

’15/ 3482’16/ 3

132.6

43.1
1,210

44.6
1,230

1,326
590

550

523

’17/ 3

44.4’18/ 3’19/ 3

199.46182.95150

00199.46151.65107.17

100
50

yen

276.71200

1’15/ 3’16/ 3’17/ 3

Book value per share’18/ 3’19/ 32,271.67

billionyen

Capital adequacy ratio (%)

Net assets

1,600
1,200

’15/ 3

4.2

28
2.7

(hundred million yen)400

’19/ 339

Total assets

300’18/ 352

47

Total assets / Net assets / Capital adequacy ratio

300’17/ 350
4.7

billionyen

800’16/ 3

Net profit margin (%)

Current profit attributable to owners of parent

10

600

’15/ 3

5.2

Current earnings per sharebillion
yen
(yen)
300

(hundred million yen)

600

0

‌
"Current
earnings per share", which is an indicator for profitability and growth analysis, has been showing an improving
trend. "Book value per share", which indicates stability, has also steadily been increasing.

Current profit attributable to owners of parent /Current profit attributable to
Net profit margin

50

6.1

■

20

Order backlog

1,238

8

2

(hundred million yen)

1,196

54

63

billionyen

Orders received

1,125

10

82

20
0

Sales / Orders received

Operating profit

40

55.8 %

Operating profit margin (%)

100
80

billionyen

7.6

billion
yen

‌
Total
assets increased as a result of the conversion of Aqua-Aerobic Systems, Inc., a U.S. water treatment engineering
company, into a wholly owned subsidiary in January 2016, and consolidation with the balance sheets in the fiscal year
ended March 2016. Additionally, the company was consolidated into the statement of income in the fiscal year ended
March 2017, and the earning power of all companies has recovered. As a result, net assets have accumulated and theequity ratio remains high.

FinancialThe‌ fiscal year ended March 2019 was the first year of the "Mid-Term Management Plan 2020". Thanks to the contributions
from sales of projects with long delivery periods for which orders have been received, and increases in completed projectsof highly profitable construction, we achieved increases in operating profit, ordinary profit, and net profit after implementing
strategic development investments for the future. This has allowed us to ensure a sound level of performance recovery. Orders
received were at their second highest level ever, following the record highs achieved in the fiscal year ended March 2018.

Sales composition (FY ended March 2019)■

Management and Operations Overview

Highlights of consolidated financial results

yen

(yen)

50

2,500

40

2,000

30

1,500

20

1,000

10

500

0

0

1,839.04 1,853.68’15/ 32,011.42 2,118.02’16/ 3’17/ 3’18/ 32,271.67’19/ 3

Consolidated non-financial highlights
Number of employees

2,977

Percentage of employees with disabilities(non-consolidated)people(persons)
3,000

2,839

2,889

2,961

2,977

(persons)
15

2,000

2.0

1,500

1.5

1,000

1.0

500

0.5
0

’16/ 3METAWATER REPORT 2019’17/ 3’18/ 3’19/ 3%3.0
2.5’15/ 3*100% rate of returning to work after taking childcare leave

（%）

2,500

0

17

2,679

2.30

Number of employees taking childcare leave

2.23

2.23

2.22

2.36

2.30

Female

Male

12
7

7

7

0

’17/ 3’18/ 3’19/ 38

5
6

3’16/ 3(FY ended March 2016 to FY ended March 2019)
Number of participants in social contribution activities

1’15/ 3’16/ 3’17/ 3’18/ 3

4’19/ 3

1,200
900

114

%

Number of social contribution activities (activities)

1,500

6

’15/ 3

Increase in the number of participants in social contribution activities

people(persons)

12
9

12

Number of participants in social contribution activities / Number of social contribution activities

1,116

1,147

1,181

63

65

65

1,275

100
80

70

60

600

40

300

20

0

’16/ 3’17/ 3’18/ 3’19/ 30

METAWATER REPORT 201918

METAWATER business developments

infrastructures,Management and Operations Overview

Contributing to developing water and environmental
which serve as a lifeline for people and industry
The METAWATER Group is one of the few water and environmental infrastructure companies with both mechanical and electrical technologies.
Utilizing cloud services taking advantage of advanced ICT and maintenance and management know-how cultivated over many years,
we propose all sorts of optimal solutions, from design and construction to maintenance and management.

Four businesses for achieving sustainable water andenvironmental infrastructure
Service solution business

Operating profit

51.8
4.4

We contribute to the development of
infrastructure in the areas of domestic
sewage treatment plants, andbillion yen (44%)

facilities

Number of on-site staff

1,200
30
41

Approx.

Number of domestic bases

Approx.

Number of prefectures where WBC*2
has been delivered

people62 projects in totalbillion yen (56%)

billion yen

Engineering, procurement, and construction (EPC) business
Designs and constructs facilities and equipment
Number of facilities
and equipment
designed/constructed

More than

Number of high-speed filtration
systems delivered
Number of monitoring andcontrol systems delivered

Ceramic membranes for large-scalewater treatment plants installed

ip
(P
PP
)

h
rs

Water and sewage business fields

65.5
3.2

2,000
40
300

Approx.

locationslocationslocations

Provides solutions to water and environmental needs overseas
e
rtn
pa
ate
priv
licPubFurther comprehensiveness and wider area managementof businesses are promoted through PPP

METAWATER REPORT 2019

Sales

Overseas business

prefectures

Public-private partnership (PPP) businessprojects /

Engi
nee
ring
, pr
oc
ure
me
n

facilities*2 Water Business Cloud
METAWATER's original information and telecommunication technologies used for sharing information in real time,
as well as for analyzing and utilizing collected information

30

Oper
atio
na
nd
ma
int
en
an
c

100

Approx.

*1 Number of waterworks facilities (including PFI and DBO), sewage treatment facilities, and resource environment facilities
being operated and maintained

ess
sin
u
b
M)
&
O
e(

usiness
PC) b
n (E
ctio
tru
ns
co
nd
t, a

Number of facilities whose operation andmaintenance are consigned to us *1

19sustainable water and environmental
and overseas water treatment plants,
resource recycling facilities.

Plant engineering business

Operating profit

Operates and maintains facilities and equipment*3 Based on the Company's data

Resource recycling facilities

billion yen

Operation and maintenance (O&M) business

Number of
public-private partnership(PPP) projects consigned*3

Sewage treatment plants

bu
sin
es
s

Sales

Water treatment
浄水場 plants

bu
sin
ess

as
se
r
e
Ov

Large-scale ozone
generation systems installed

Local bases/Partners

Approx.

Approx.

Approx.

1060
20locationslocationslocations

METAWATER REPORT 201920

Sustainable
creation of corporate value and contributions to society and the global environment
持続的な企業価値創造と社会・地球環境への貢献

Contributing to society,the global environment, and SDGs

The METAWATER Group wishes to be a corporate group that is trusted by both partner companies and local companies,
is highly regarded by local governments, and is requested by society. To that end, our aim is to continue contributing to
the preservation of local communities, society, and the global environment, while at the same time increasing corporate
value, though activities aimed at maintaining, improving, and sustaining water and environmental infrastructure, as wellas CSR activities such as water and environmental conservation, awareness raising, and disaster recovery and support.

Through our business and CSR activities, the METAWATER Group will
not only improve corporate value, but also contribute to the sustainable development of local communities and society as well as thepreservation of the global environment. Additionally, by taking thebusiness characteristics and social responsibilities of the Group into
consideration, we will contribute to the achievement of the following
three of the 17 SDGs.

Issues faced by local communities and society
There are many diverse issues surrounding water and environmental
infrastructure. The METAWATER Group is standing with local communities
and society, offering up ourselves as a one-stop solution by working
with people, technology, and information to solve these problems.

Water source forest
conservation activities

Domestic water and sewage market
Decreases in local government revenue and shortages of engineers
Aging facilities and equipment● Natural disasters such as major earthquakes and heavy rains
●

META
WA

●

Water treatment plants

TER Group

rnme
gove
L o c alnts

Created value

NPOs

Water intake

Discharge

Overseas water and sewage market
Aging facilities and equipment in developed countries● Stricter environmental regulations● Increasing demand for infrastructure in emerging countries

Sewage treatment plants●

Pipeline

Reusedwater

Recyclingm

Civil
Mechanicalengineering equipment

Electricalequipment

MaintenanceIndividually entrusted to multiple private companies

21

METAWATER REPORT 2019

Overseas sales (consolidated)●

Corporate value

METAW
ATER Group

mp

For the domestic market, in promoting PPPs we will strengthen partnerships
with companies having complementary relations through "further comprehensiveness + wider area management". In the European and North American
markets, we plan to work on expanding business and creating synergies
centered around group companies and partner companies, promoting partnership strategies with M&A in mind. In other regions, we will promote PPPs
utilizing ODA, yen loans, etc., to meet local needs.

l
ca

ts
ernmenLocal gov

Further comprehensiveness
Facility design, construction, maintenance(inspections and maintenance), and operations are comprehensively ordered to a
private consortium. The METAWATER
Group acts as a representative of thatprivate consortium, promoting efficientmanagement through overall optimization
with partner companies and local companies.

Partnerships

co

co

Lo

s

The primary roles of private companies are
facility design, construction, and maintenance (inspections and maintenance),ordered individually for each piece ofequipment. The local government is
responsible for operating the facility. The
METAWATER Group is entrusted with thedesign, construction, and maintenance of
mechanical and electrical equipment.

●aniSociety /Local communities

ernie

Sales (consolidated)es

P a rtn

Traditional methodpa

200 billion yen
20 %100 billion yen●

Rainwater / Domestic wastewater

Supply water

Solutions to these issues

Resources

The METAWATER Group strives to achieve sustainable corporate
value through business and CSR activities, and to achieve the following quantitative goals set as our long-term vision.

Pipeline

Resource recycling facilities

In the domestic market, the role of private enterprises is expected to grow as
the need for further comprehensiveness and wider area management of thewater and sewage businesses increases due to decreases in local government
revenues and shortages of engineers caused by a decreasing population. In
addition to the METAWATER Group's mechanical and electrical technology,
operation and maintenance know-how, and abundant experience withpublic-private partnerships, we are working on solving these issues by building
our own ICT platform and management system.
In the North American and European markets, we are developing businesses
centered around group companies and partner companies, while in markets such as
those of emerging countries we are promoting initiatives tailored to the local needs.

経営・事業Operations
概況
Management
andOverview

We will continue contributing to the preservation of local communities,
society, and the global environment, while also increasing corporate value
by solving water and environmental issues.

Further comprehensiveness + wider area management
METAWATER's ICT platform
and "three centers concept"
Facility A

Facility B

Design, construction, maintenance, and operations of multiple facilities arecentrally ordered to a private consortium. A typical example of this is concessions. The METAWATER Group aims for efficient and sustainable operation
through its original ICT platform and the "three centers concept".

Civil
Mechanical Electrical Maintenance Operationengineering equipment equipment
Comprehensively entrusted to a private consortium

Facility C

A private consortium is entrustedwith comprehensive waterand sewage operations

Facility D

METAWATER REPORT 201922

Business highlights

for medium- to long-term growthManagement and Operations Overview

Promoting development of products and solutions
The METAWATER Group is working on solutions for a new generation, integrating our Group's strengths in mechanical and electrical
technologies, joint research, open innovation with partners, etc., with the goal of more advanced technological development thatwill help sustain infrastructure and improve operational efficiency.
New technologies

Recycling technology

Water environment controller "ZLS"

Vertical high-speed crusher

Achieving the high level of availability and environmental resistance required forwater environments

We developed a vertical high-speed crusher that crushes incombustible andbulky waste down to a particle size that can be easily recycled

We have developed "ZLS", a controller for water environments that supports the optimization ofoperation, maintenance, and engineering of ever-more advanced and ever-more complicated waterand sewage facilities.
"ZLS" has improved specifications from previous models, including an increased CPU processing
speed, reduced instruction execution time, and increased program capacity. It also has applicationcompatibility and allows for smooth inheritance of program libraries when updating the water
environment control system.

With the enforcement of the Act on Recycling of Specified
Kinds of Home Appliances, home appliances must be
recycled by manufacturers. Large household appliances,which traditionally had been crushed and sorted at bulk
garbage treatment facilities, are no longer collected.
Crushers suited to the treated materials are desired, andso we have developed a resource recycling facility that
efficiently recycles waste with saving space.

■ Sorting mechanism
Spout
Insertion
port

Breaker

ZLS

Comparison with conventional horizontal
equipmentDownsized for reduced installation volume
Large bulk specific gravity of the crushed material,
increasing transportation efficiency● Reduced motor capacity due to downsizing● Reduced maintenance costs

CasingRing grinder

Sweeper●●

New technologies

High performance digester mixer

Technological quality and performance evaluated as contributing to environmental
preservation and promotion of the environmental equipment industry
We developed a sludge digestion system* that stably generates combustible gas by installing four
paddle vanes in the sewage sludge digester and a radial blade at the bottom of the tank, generatinga circulated flow in the tank and allowing methane fermentation to be carried out efficiently.
The combustible gas is used by gas turbines, etc., to generate power, contributing to reduced
maintenance and management costs for treatment plants, reduced LCC, etc.
This technology won the Chairman's Award at the 45th Outstanding Environmental Systems
Awards hosted by the Japan Society of Industrial Machinery Manufacturers.

AI / ICT

Mixer model

Cutting-edge technology initiatives

Emergency ceramic membrane filtration system

Trial use of drones for facility inspection

Image recognition technology utilizing AI

We have been conducting surveys and research regarding the use ofdrones for maintenance, etc., of water supply and sewage infrastructure(water sources, pipelines, pipeline facilities, facilities at water treatment
plants, facilities at sewage treatment plants, discharge rivers, etc.).
We will be holding demonstration experiments to see if drones can beused to perform operations that had previously required people to enter
hazardous areas directly.

We have built a system that can frame and detect equipment and objects
necessary for ensuring safety at construction and maintenance sites.

Utilizing a ceramic membrane, one of our flagship technologies

Helmet not being worn

Recognize if helmets
are being worn or not,manage workplacesafetyI nvestigating and measuring
the conditions of various water
sources and discharge rivers● Diagnosing deterioration and aging
of facilities● A erial survey of facilities onhigh ground●Prototype unit

METAWATER REPORT 2019

Helmet being worn

Example demonstration
experiments

We decided to develop a portable emergency ceramic membrane filtration system, and so we createda prototype.
This system uses the know-how cultivated through the engineering of the in-vehicle ceramic
membrane filtration equipment supplied to Africa and Southeast Asia to improve both usability andportability in the event of an emergency or disaster. In addition to lending these free of charge tolocal governments, we are planning to also deploy them at our domestic bases so that we can flexibly
lend them to others in an emergency.

23

Vertical high-speed crusher

Utilizing cutting-edge technology to respond to an era of population decline,
contributing to securing the labor force and improving safety and productivity*Jointly developed with Satake Chemical Equipment Mfg., Ltd.

New technologies

Discharge port

Monitoring for intrusion into hazardous areas

METAWATER REPORT 201924

Business highlights

Management and Operations Overview

B-DASH Project*1

Development technology*1 Innovative sewage system technology demonstration project sponsored by MLIT

ICT technology

Water technologies(FY2018 B-DASH Project)

Demonstration research of continued stock management realization system technology in a cloud environment with maintenance data as original sources

LED UV irradiation equipment

Supporting the establishment ofeffective stock management amid
the ever-increasing number of aging facilities

Long service life with reduced maintenance costs
Organization/
StorageCollection

Demonstration coverage
1 Source data collection/organization system

We have demonstrated that continuous stock management canbe achieved through an ICT platform and cloud system that makes
it possible to effectively collect, organize, store, and use themaintenance data generated in day-to-day operations.
Demonstrators: Joint research group organized by METAWATER Co., Ltd.,
Ikeda municipal government, Ena municipal government
Demonstration areas: Sewage Treatment Plant in Ikeda City, Osaka,
Water Purification Center in Ena City, Gifu, and five other facilities
Demonstration years: FY2018 - FY2019

Use

Use

Cloud server
System registry Library

Achieving effective
and continuous
stock management

Organization/
Storage

Uniquecode

Collection
Regularinspection

ReportingSpecialRepair failures Investigationetc

2 Real-time evaluation and

3 Performance degradation

visualization systemsimulation

Evaluation items

Current

Facility A
Facility B
Facility C

New

Degree ofsoundness Past

Expanded view

Present

4
3

Evaluation of degree of soundness
Preparation of stock
management plan

Actual size

Degradation prediction model, etc.
5

Treatment equipment, etc.

Planned sewage volume:
approx. 50,000 m3 a day

In addition to adopting the world's highest rated high-power UV-LED as a lightsource, a lifespan approx. 3x that of ultraviolet mercury lamps has been achievedby controlling UV-LED output, optimizing irradiation, etc. The 300 m3/day and 1,200 m3/day
water treatment volume models developed so far have received the Certificateof the JWRC Standard Conformity of Ultraviolet Irradiation System by the Japan
Water Research Center (JWRC).

Futureprojection
Available data

2

Also takes into account factors
1that degrade functionality

Time

UV-LED package■ Characteristics of this technology

External appearance of equipment (MWLED series)

1 Source data collection and organization system

Efficiently collect, organize, and store various types of maintenance data at various locations through centralized management

Sewage technology

2 Real-time evaluation and visualization system

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

Low pressure loss membrane diffuser (cloth diffuser)

3 Performance degradation simulation

Create models predicting long-term changes in equipment operating performance and introduce a probabilistic distribution for future
equipment performance to help determine 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.

Sewage technology(FY2019 B-DASH Project)

Demonstration research for advanced treatment technology through ICT and AI control of single tank nitrification and denitrification process

Realizing short HRT advanced processing, reduced energy use, and reduced maintenance burden
Integrated calculation control system

Single tank nitrification and denitrification process

Automatically calculates required air volume for reaction tank andoptimum blower discharge pressure based on sensor information(corresponding to load and seasonal fluctuations)

Stable air volume control in accordance with load fluctuations
allows for treated water quality equivalent to the A2O methodwith short HRT (anaerobic parts installed for phosphorus removal)

Water
quality sensor

Remotemonitoring

A cylindrical diffuser made of stretchable fibers that generates fine bubbles fromnumerous gaps in the texture, reducing the amount of air by increasing oxygen
transfer efficiency. Since it is a low-pressure-loss type, blower discharge pressure
can be kept low, reducing power costs. Additionally, replacing just the diffuser itself
is simple and it has excellent maintainability.

■ Air diffusion system
Stretches
Does not stretch

This technology achieves a treated water quality equivalent to
the A 2O method with short HRT by controlling the air volume
corresponding to fluctuations in the reaction tank inflow load. At
the same time, by using ICT and AI for integrated management, theoptimal discharge pressure for the blower is calculated from therequired air volume in real-time, and the discharge power is reducedby controlling the discharge pressure.

Diverse operation by enabling intermittent operation

SludgeDemonstrators: Joint research group organized by METAWATER Co., Ltd.,
Japan Sewage Works Agency, and Machida City
Demonstration areas: Naruse Clean Center (Machida City, Tokyo)
Demonstration years: FY2019 onward

Load fluctuation
following blower unit
Controls discharge pressure,stably and economicallysupplying air

Anaerobic

Aerobic(Anoxic)

Cloth diffuser

Whengenerating
bubbles

Bubbles

Aerobic

Photo of the bubbles

Cloth diffuser (during aeration)
Pressure gauge

Air flow
control valve

Promoting basic research on ceramic membranes with universities■ Characteristics of this technology
Realization of short HRT (retention time) through air

Flexible formation of aerobic and anoxic zones in accordance with loads using ICT*2

Realization of equipment cooperation through the utilization of

Calculating the optimal blower discharge pressure from the required air volume in real-time,the discharge pressure is controlled

Realization of reduced operation adjustment burden by

Control parameters for required air volume calculations are automaticallytuned using AI (machine learning functions)

1 volume control using ICT

2 ICT and reduced blowing power through pressure optimization
3 responding to seasonal fluctuations, etc., using AI

25

METAWATER REPORT 2019*2 NOx and NH4 meters are used in this technology

In order to suppress membrane fouling (clogging) associated with the continued
use of ceramic membranes, we are conducting basic research on the introduction
positioning relationship between coagulation, which is the pre-treatment, andozone treatment, as well as on removability of biopolymers* 3. For this research
we received the Encouraging Prize in 2017 from the Society of Environmental
Instrumentation Control and Automation together with our joint search partner,
Gifu University.
*3 It has been suggested that these substances are involved in membrane fouling.

Award ceremony

Ceramic membrane

METAWATER REPORT 201926

Introduction to business operations

Plant Engineering Division

We will bring new value and contribute to achieving a sustainable
The Plant Engineering Division is engaged primarily in the design and construction of mechanical and electric
equipment for water treatment plants and sewage treatment plants at home and abroad, as well as the engineering,procurement, and construction of a variety of devices used with the equipment. METAWATER is a unique corporation
with expertise in both mechanical and electric technologies. We design and construct eco-friendly plants incorporatingenergy-saving, energy-creation technologies, etc. using electric technologies that maximize our unique mechanicaltechnologies and capabilities. Combining mechanical and electric technologies and product development expertise, wedevelop efficient water treatment plants and sewerage treatment plants, save energy, and efficiently use resources.
Director, Senior Executive Officer
Executive General Manager of Plant Engineering Divisionsociety.
Project Topics
Business topics Renovation of water treatment facilities at the Komatsu City Central Purification Center

Introduction of intensive solid-liquid separation technology* as an alternative tothe primary sedimentation tank

Noboru Okuda

The Komatsu City Central Purification Center water treatment facilities (Komatsu City,
Ishikawa Prefecture), which were renovated through a joint venture being represented
by METAWATER, began operation in November 2018. We have introduced our highspeed filtration system as an alternative to the primary sedimentation tank, which has
had an effect on improving simple treatment performance in clear and rainy weather. This
has realized a reduction in space used and eliminated construction costs for confluence
improvement facilities.

Major activities
●

●

Given
the frequent occurrence of local heavy rainfalls in recent years,‌
we identify rain clouds using radar installed on high ground, detect
cumulonimbus clouds at an early stage, and project rainfalls to mitigate
flood damage. In addition, we work to improve confluences of rainwater
and wastewater with high-speed membrane filtration technologies,
which contribute to elevating water quality in rivers and marine areas.
‌‌As facilities continue to age and the population continues to decline,
we are working on joint research with the Japan Sewage Works
Agency to spread alternative technology for the primary sedimentation
tank, which can save space, in order to respond to the growing needs
for consolidation of facilities and treatment plants.

●

●

We
‌ are proposing a number of energy solutions, including various
power generation technologies utilizing waste heat from digestion
gas emitted through processes of sewage treatment and sludge
incineration treatment.
We
are contributing to building local communities that offer‌
comfortable lives through a disaster rehabilitation project on the coastof the Tohoku region.

*This technology was developed from joint research between METAWATER and the Japan Sewage
Works Agency for the innovative sewage system technology demonstration project (B-DASH Project)
led by the Ministry of Land, Infrastructure, Transport and Tourism in FY2011. It has been empiricallystudied as a commissioned study by the National Institute for Land and Infrastructure Management,
and is part of technology that has been evaluated by experts. This will be the first introduction case inJapan since the Institute has formulated the technology introduction guidelines.

Komatsu City Central Purification Center

Renovation of water treatment facilities at the Komatsu City Central Purification Center (machinery)(electrical equipment)〃
Contract applicant: Komatsu City, Ishikawa Prefecture
Address: Site in Tsurugashimamachi, Komatsu City
Construction period: March 13, 2017 - March 29, 2019

Internal meeting of engineers

SDGs being promoted

Implementing leading-edge technologies, including advanced water-quality
improvement technologies, energy-saving technologies, and clean energy
power generation for degraded water purification plants and sewage
treatment plants enables stable supplies of safe and clean water of sufficientquality and capacity through plant construction.
Constructing sustainable plants with downsized technologies in response toa social environment with falling populations and super-aging societies

Valve room for high-speed filtration equipment

B-DASH Project adoption technology put into practical use

Intensive solid-liquid separation technology (alternative to primary sedimentation tank/confluency improvement)

Upper
screenIn rainy weather, it is possible to improve confluency and reduce thepollution load on rivers and seas by filtering the increasing amount of
sewage and discharging it into the river after disinfection. This alsocombats direct discharge of untreated sewage, which is a social issue.

Upper
screenDownward flow

METAWATER REPORT 2019

Pressure
regulation channel
Filtermedium layer

Raw water

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
will take up the challenge and pursue optimal engineering, procurement, and construction, and bring about new value, thus contributing toachieving a sustainable society.

Can also be used to improve confluency

上Upward
向流 flow

Future developments

Technology that efficiently removes foreign substances and BOD, SS, etc.,
using an original filter medium. Can be installed as an alternative to existing
primary sedimentation tanks, taking up less space and improving the amountof water that can be treated without adding equipment. Simple cleaning andmaintenance reduces maintenance costs and contributes to lower energy usage.

Actual size

Raw water

Engaging in disaster rehabilitation work centered on the coast of the Tohoku
Region and contributing to building sustainable local communities byimproving the water environment

Space-saving installation and simple maintenanceSpecial filter medium improves
processing performance‌
Developing
technologies and supplying solutions for increasing sewage
inflows due to abnormal weather such as heavy rainfalls

27

Management and Operations Overview

Strategy for the futureHigh-speed
cleaning equipment

Ensure water treatment functionality in the event of a disasterTo washingwastewater tank

Filtration process

Cleaning process

Excellent earthquake resistance and BOD/SS processing performance,
making it effective for BOD response measures thanks to sedimentation/sterilization and primary processing in the event of a disaster.

METAWATER REPORT 201928

Introduction to business operations

Service Solution Division

The Service Solution Division is engaged in business activities that include inspection, repair, operation, andmaintenance of mechanical and electric equipment of domestic water supply and sewage facilities, as well as
design, construction, operation, and maintenance of waste treatment facilities (bulk waste, incombustible waste,
and recyclable waste). Given a domestic water supply and sewage business facing degradation of facilities andequipment, there are high expectations of private companies when local governments are experiencing financial
squeezes and there are shortages of engineers and staff to operate and maintain facilities. The Service Solution
Division provides services through networks run by 30 operating bases across the country. Our services are oriented
toward customers in local communities. For 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.
Senior Executive Officer
Executive General Manager of Service Solution Division

sustaining water and environmental infrastructure.
Project Topics
Business topics Shitomogawa Purification Center facility inspections, operation monitoring, etc.

Establishing the last new sewage treatment plant in Japan, with the EPC and service departments working
together to obtain a long-term contract for maintenance, inspection, and monitoring

Makoto Shimizu

As expectations placed on private companies in the water and sewage businesses increases,
METAWATER is receiving large-scale orders that encompass everything from design andconstruction to operation and maintenance. Additionally, for EPC projects that were initiallycommissioned just for design and construction, there are an increasing number of cases
where operation and maintenance work is ordered as well after construction.

Major activities
●

●

●

We
‌ provide wide-area administration services for facilities, basedon the Water Business Cloud (WBC) using IoT and cloud computing
technology, and registry services for equipment and devices to support
asset management.
We‌ are continuously proposing optimization to realize reduced energy
usage, automation, reduced need for human personnel, etc., throughthe introduction of cutting-edge technologies such as AI and ICT.

This is thanks to collaboration between the EPC department, handling design andconstruction, and the service department, handling operation and maintenance. Working
together with the service department from the design stage allows proposals to be madethat consider all aspects of on-site operation, including ease of use, efficiency, and safety.

Shitomogawa Purification Center

Shitomogawa Purification Center
Outline of facility inspections, operation monitoring, etc.

We‌ strive to strengthen partnerships with local companies in order tooffer more stable and local-community oriented services.

Facility name: Mie Prefectural Sewerage Management
Public Corporation
Shitomogawa Purification Center
Business details: Facility inspections, operation monitoring, etc.
Contract period: April 1, 2019 - March 31, 2024
Maintenance management operation using WBC

SDGs being promoted‌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 new services, such as automated unmanned operation
Services for WBC-based and SaaS-type operations (providing softwareand software operating system environment through a network)
Design and operation of waste treatment facilities with functions attachedwhich enable local residents to address the importance of reducing andrecycling waste, and supporting their education and encouragement‌‌
Reinforcing
the service solution business through partnerships withlocal companies

Future developments
In the future, in addition to conventional maintenance services, we will continue to provide new services including a variety of outsourced
services related to stock and asset management, along with expanding PPP projects.
We will strengthen and actively promote partnerships with local companies and governments by proposing profit-sharing systems
that return profits from the sale of recyclables (metals, cans, plastic bottles, etc.) generated during the waste disposal process to local
governments, basic equipment improvement projects that prolong service life without needing to close old waste treatment facilities, etc.

29

METAWATER REPORT 2019

Management and Operations Overview

We will continue to create and offer new services that contribute to

METAWATER SERVICE Co., Ltd. is the service department from the design stage, and also works
on central monitoring and control facilities as well as substation facilities for the Shitomogawa
Purification Center, which is said to be the last new sewage
treatment plant in Japan, completed in March 2018.
Adopting a site-friendly maintenance management proposal,
since the start of operation in April 2018 we have beencommissioned for a long-term period (5 years) to operate
and maintain water and sludge treatment facilities using ICT.

Strengths of the METAWATER service business
The know-how for starting up new treatment facilities

Maintenance utilizing ICT

In the past few decades, there have been almost no new sewage treatment
plants in Japan, making the experience of starting up a sewage treatment plantfrom scratch invaluable.
Several years ago, METAWATER set up a new treatment plant in Aichi
Prefecture, and that experience and know-how have been put to great use with
the Shitomogawa Purification Center, enabling a smooth start to operations.

METAWATER's cloud service WBC
has a Smart Field Note feature fordaily inspections. With this, smart
devices are used for efficient
operation and maintenance.

Collaboration between the EPC (design andconstruction) department and service department
For design and construction, the service department, which handles
operations and maintenance, conveys opinions related to safety,
operability, etc., from the on-site viewpoint to the EPC department,
working from the design and proposal stage as a united “TEAMMETA” with the company acting as one.

TEAM - META

EPC (design and construction)

Operation and maintenance

Emergency response capabilities

24h 365day 60min
In order to deal with potential accidents and trouble at nightand during holidays, we have established a system that allows
for emergency dispatch 24 hours a day, 365 days a year. A
representative will arrive at the Center within an hour of receiving
the dispatch request.

METAWATER REPORT 201930

Introduction to business operations

International Business Division

The International Business Division aims to develop business focusing on providing METAWATER's unique anddifferentiated products and technologies to countries all around the world, including Asia, where future market
expansion is expected, and centering on North America and Europe, where environmental regulations are becoming
increasingly strict. In order to accomplish this, we strive to maintain a focus on localism.
We participate in the global water business, which is expected to expand in the future, by promoting the localization ofbases and delivering products and technology customized to meet local demands and environmental changes, allowing
us to become a reliable presence in the regions we're working in. We are also contributing to the development of thewater environment in various regions all throughout the world, as well as to SDGs from the viewpoints of improving
sanitary conditions, creating a comfortable place to live, and fighting global warming.
Executive Officer
Executive General Manager of International Business Division

problems through a focus on localism
Project Topics
Business topics Project for water quality improvement for Japanese Bridge area in Hoi An City, Vietnam

Cleaning the water of Hoi An, a city of world heritage,using Japanese water treatment technology
In November 2018, we completed a sewage treatment facility* 1 featuring theadvanced energy-saving sewage treatment system, technology developed for
emerging countries, in Hoi An, Vietnam. By improving the water quality around the"Lai Viễn Kiều (Japanese Covered Bridge)" area, which has a deep connection withJapan, we are contributing to an improvement in living and sanitation conditions, andpreserving tourist attractions.

Ken Akikawa

Major activities●●

In‌ North America, Aqua-Aerobic Systems, Inc. (AAS) became asubsidiary of METAWATER in 2016, and has developed differentiatedtechnologies with an impressive presence, including a sequencing
batch sludge system, cloth media filter, and Aqua NeredaⓇ, an aerobic
granule sewage treatment technology. It has a stable revenue basewith a sales network covering the entire United States. Additionally,
we are gradually developing our own water treatment technologies,
ozone generation systems, and ceramic membrane filtration systems
with AAS at the core.
In‌ Europe, we are expanding the CeraMacⓇ system worldwide using ourceramic membranes together with the Dutch company PWNT. Basedon the results we receive regarding introduction of this technology
to water treatment plants in the Netherlands, England, Switzerland,
and Singapore, we will promote the expansion of water treatment
technology using our technology by strengthening strategic cooperation
with PWNT.

●

●

In
‌ Asia, we delivered the first machine of an advanced energy-saving
sewage treatment system, which has been acknowledged as overseasoriented technology by the Japan Sewage Works Agency, working
toward realization of technology localization in emerging countries.
Additionally, a representative office was established in Singapore
with the primary purpose of conducting market research on the water
environment, collecting the necessary information for future projects.
Together with the representative offices already established in Hanoi
and Phnom Penh, we aim to expand our business in the growing market
of Asia.
For‌ other news, a total of 25 in-vehicle ceramic membrane filtrationequipment were sold in six African countries and Southeast Asia. We
have also been contributing to the development of local communities,
receiving a letter of thanks from the government of Myanmar regarding
use of this equipment during floods.

Management and Operations Overview

Contributing to solving the world's new water environmental*1 This project was a joint venture between METAWATER and TSUKISHIMA KIKAI CO., LTD.

Interview with staff in charge

Hoi An sewage treatment facility

I served as the on-site lead for mechanicaland electrical work.
What brought me the most joy was that our
technology could contribute to improving
the local water environment, and that I got
to hear words of appreciation from the local
residents.

Plant Engineering Division

Toichiro Sasaki

Lai Viễn Kiều (Japanese Covered Bridge)

Developing a water treatment system that meets the needs of a country
SDGs being promoted

Sale of sewage treatment devices and water purification devices
in North America
Development of ceramic membrane filtration technology incooperation with overseas companies
Implementing advanced energy-saving sewage treatment
systems in Asia
Deployment of in-vehicle ceramic membrane filtration equipment
Creating jobs and providing education through local companies,
subsidiaries, representative offices, and projects in local areas

Features of Pre-treated Trickling Filter (PTF) system, a technology developed for Southeast Asian countries
The PTF system is a technology developed for emerging countries through METAWATER's use of industry-academia collaborations, and has been
acknowledged as "overseas-oriented technology*2" by the Japan Sewage Works Agency.
This technology was developed with the goal of improving regional water quality through sewage treatment, improving the living and sanitation
conditions and contributing to the development of the local economy.
*2 The name of the system acknowledged as overseas-oriented technology by the Japan Sewage Works Agency is the "advanced energy-saving sewage treatment system",
however this is synonymous with the "Pre-treated Trickling Filter (PTF) system".

■ System flow

A system combining three of METAWATER's unique technologies

Grit chamber /Water pump

Future developments
Floating sponge filtration system

We will continue to promote localization, discover partner companies in various regions, and engage in dialogue with customers throughout
the world so that all regions will take new water environment issues seriously. We will also create new value by taking advantage of ourtechnology and experience. We will continue to contribute to the realization of a sustainable society by quickly detecting changes in theever-changing global water environment and providing solutions.

31

METAWATER REPORT 2019

(FSF: Floating Sponge Filter)

High-rate trickling filtration system

Solid SS* and BOD* areremoved by filtration(HTF: High-rate Trickling Filter)

3*3 SS: Suspended Solids*4 BOD: Biochemical Oxygen Demand

4

Biofilms primarily remove
soluble BOD*4

Disinfection tank /Wastewater pump

Final solid-liquid separation tank
(SLS: Final Solid-Liquid Separator)

Filter and remove fine SS*3
such as detached biofilms

METAWATER REPORT 201932

Introduction to business operations

PPP Division

The Public Private Partnership Division promotes PPP projects in the Japanese water and sewage market.
In Japan, we need to take early measures to resolve a string of issues including falling revenue and alack of engineers in local governments operating water supply and sewerage projects, at a time where
there are declining populations, degradation of facilities and equipment constructed during a period ofhigh economic growth, and major earthquakes and torrential rainfalls. Since the implementation of the
PFI Act in 1999, public infrastructure developments have been carried out through PPP using the capital,technologies, and know-how of the private sector. Furthermore, the Water Supply Act, which was revisedin 2018, clearly calls for the promotion of wider area business operations, public-private partnerships, andmore, making it likely that projects using the private sector are likely to expand further.
Executive Officer and Executive General Manager of
PPP Divisionin the PPP business.
Project Topics
Business topics Aizuwakamatsu City Takizawa Water Purification Plant Renovation Project

Renovating and maintaining a historic water purification plant in the
Aizu region, building a fully integrated maintenance system "from intake to faucet"
The METAWATER Group has been entrusted with the Aizuwakamatsu City Takizawa Water
Purification Plant Renovation Project in Fukushima Prefecture. This project was implemented
using the DBO method*2, and the Takizawa Water Purification Plant is being designed andconstructed by the METAWATER Group. Since April 2014, a SPC*3 "Aizuwakamatsu Aqua
Partner Co., Ltd.", of which we serve as the representative company, has been managing theoperation of water treatment plants in the City, including the Takizawa Water Purification
Plant, as well as maintaining water transport and distribution facilities.
Taking advantage of our abundant amount of business achievements, we support the stable
and continuous supply of safe, high quality water.

Masashi Sakai

Major activities●We‌ undertook the "Comprehensive Consignment of the Arao City
Water Business, etc." in 2016, which was a consigned project package
comprehensively covering areas from customer services to asset
management for water supply facilities. When launched, this consigned
project was the first in Japan to provide comprehensive●‌ In the same year, we also participated in a project related to a thirdsector company, Kitakyushu Water Service Co., Ltd., with joint
investments from the municipal government of Kitakyushu City, Fukuoka
Prefecture, and six private companies, and are engaged in monitoring
operations and centralized control of municipal water and wastewater
facilities and other wide-area projects.
●

and the consigned areas covered were expanded, including involvementin business operations for management and planning support andadministration of water supply and sewage pipelines, which had
previously been undertaken by local governments and governmental
institutions. As a result, as a growing company, our consigned businessareas offering total solutions have expanded.

Management and Operations Overview

We will focus on formulating a new business base as a front runnerTakizawa Water Purification Plant*2 DBO: An abbreviation for Design, Build, and Operate. An approach where private companies collectively handle facility
design, construction, and operation and maintenance*3 SPC: An abbreviation for Special Purpose Company. Companies whose purpose is to run specific business operations

Project summary
Project name: Takizawa Water Purification Plant Renovation Project
Project scope: Takizawa Water Purification Plant maintenance (design and construction)
Maintenance and operations from the water source to the faucet (including
operation management of the cities four water treatment plants and one water
treatment facility and maintenance management of water transport/distribution
facilities in the City, through third party commission)In‌ addition, we were consigned the Nakatsugawa City’s comprehensive
water supply consignment project (Gifu Prefecture) and other projects,

Design and construction period: April 1, 2014 - March 31, 2018
Operation and maintenance period: April 1, 2014 - March 31, 2033 (19 years)
Design and construction: METAWATER GroupOperation and maintenance: Aizuwakamatsu Aqua Partner Co., Ltd.

Arao City BCP

SDGs being promoted‌
Activities
ranging from design and construction to operation andmaintenance of water treatment plants, including mechanical andelectric equipment
We propose appropriate solutions tailored to local government issues,
such as the transfer of technology and financial deterioration in thewater and sewage business. A number of our unique value-added
services for PPP projects are also proposed.
Execution of a Business Continuity Plan (BCP) in the event of a natural
disaster such as water supply activities following the Kumamoto
Earthquakes in April 2016.

1,000 citizens participated in the commemorative "Water Festival" ceremony
In April 2018, a commemorative "Water Festival" ceremony
was held to celebrate the completion of the Takizawa
Water Purification Plant renovations in Aizuwakamatsu City.
Approx. 1,000 people participated in the event, including
the mayor of Aizuwakamatsu, Shohei Muroi, and otherrelated parties. A tour was offered, wherein we were able
to show off all the new renovations of the purification plant
and let citizens know how important the water supply is.
METAWATER is working on PPP projects with the goal of
having public and private partners work together, as well as
promoting love and trust by local residents, our customers.

Completion ceremony

Future developments
Amid increasingly expanding business areas that are expected to be covered by the private sector, we have positioned the PPP businessas a growth area and seek to formulate a new business base targeting privatization and wide-area services in the water and wastewaterbusinesses.
We have already participated in more than 30 PPP projects. In the future, we intend to promote the following three measures and workon 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, andresponding to wide-area services with comprehensive service packages.
33

METAWATER REPORT 2019

Membrane filtration facility tour with citizens

Multiple events, such as a performance by a local JHS brass band

METAWATER REPORT 201934

E

Environment

S

SocialMETAWATER Group’s ESG

Aiming at sustainable growth
Major activities
The METAWATER Group regards itself as having the responsibility to continue to be a fair andhonest company as a good corporate citizen, contributing to the sustainable development of society
and the global environment. To that end, we are working to solve social issues related to ESG

GGovernance(Environment/Social/Governance) by identifying the important issues from the perspective of SDGs
based on the expectations of our shareholders and changes in social and business environments.

of corporate value
METAWATER Group’s ESG activities
Issues to be resolved

E

Natural resources

S

Work-style reforms /development of abilities /diversity

SocialP.43

G
Governance
P.53

Our offices● Wastewater sludge fuel system that converts waste into fuel● Recycling systems that contribute to highly efficient and safe recycling● Promoting the reduction of paper use and office power consumption● Promoting work-style reforms, developing abilities to support individual employees, andpromoting diversity● Health and safety management so that employees can work happily and enthusiastically● Ensuring the quality of products and services provided● Strengthening relationships with partner companies and promoting CSR procurement

Quality● Community contribution and environmental conservation activities in cooperation with local

CSR procurement

governments, education and training for the next generation children, international support,
disaster recovery, and reconstruction support activities

Social contribution activities

METAWATER’S ESG

P.37

Waste recycling facility

Reducing
environmental burden

Health and safetywith dignity. The METAWATER Group believes that achieving Goal 6 can lead to other issues being solved as well.

● No. 1 market share for diffuser equipment, with significantly reduced

power consumption

Environment

Goal 6 of the SDGs is an essential materiality to maintain social activities, and for humans to live safely and

Sewage area

Wastewater andwaste substancecontribute to the sustainable growth of society.

through strategic promotion of Goal 17.

● Ceramic Membrane Filtration System reduces waste and saves energy● Water treatment systems reduce river and sea pollution in wet weather

and environmental lifelines, we will strive to ensure that we earnestly do what is needed in order to

We have positioned Goal 6 of the SDGs as our top-priority materiality, while also aiming to achieve Goal 11

Water-supply area

Climate change

Reaffirming the importance of the missions of a company whose business is focused on the water

Identifying important issues (materiality)from the perspective of SDGs

Examples of our major activities● Water source forest preservation and environmental conservation efforts

Corporate GovernanceInternal controls
Corporate activities
Risk management●

Assuring management transparency●

Forming Compliance Working Group and implementing compliance education● Improving information security measures●

Strengthening Business Continuity Management (BCM) activities

Compliance

Topics35

METAWATER REPORT 2019

Exhibition held at a reception organized by
the Japanese government at the UN headquarters

As a company that supports water and environmental infrastructure, the METAWATER Group is actively participating in these international efforts, while at the sametime contributing to the achievement of SDGs and sustainable infrastructure development, focusing on the water supply, sewage, and resource environments.

In July 2019, a reception hosted by the Japanese government was held in conjunction with the "High-level Political Forumon Sustainable Development", a yearly event held at the United Nations headquarters in New York. The "High-level Political
Forum on Sustainable Development" aims to promote the UN's SDGs, global Sustainable Development Goals. For this year's
event, nearly 200 guests from countries all throughout the world participated. At the reception, small booths related to
SDGs were exhibited by local governments and companies, showing their dedication to the promotion of SDGs. METAWATER
was one of those companies.
We have introduced various technologies to respond to climate change, including in-vehicle ceramic membrane filtration
device, which was developed for areas that do not yet have developed waterworks and can be used as an emergency water
purification device in the event of a disaster, and a high-speed CSO filtration system, which improves drainage during
periods of heavy rain.
Officials from the government of Papua New Guinea who visited the METAWATER booth said that they were "extremelyinterested in both technologies for Papua New Guinea" and that they would be contacting the Japanese embassy in Papua
New Guinea. Additionally, there were many people from various other countries who got interested in water issues as well.

Giving an explanation of our technology to government officials from
Papua New Guinea

Ambassador Hoshino (second from the left), a representative of Japanfor the United Nations, and members of METAWATER

METAWATER REPORT 201936

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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.

Contributing to water and environmental infrastructure
through business

Treatment processes and technology for water and sewage treatment plants
Ozone technology

Water treatment plants
Water

The environment surrounding water changes daily, and challenges vary by

Water treatment technology

country and region. In recent years, environmental destruction caused by

Water intake
facilityplastic waste has also become a major problem.
Beginning from the era of our founding companies NGK Insulators, Ltd. andReceivingtank

Chemicalmixing tank

Sedimentation
tank

Adjust waterMix in flocculant
level and volume

Sink and separate
lump sand and soilStore purified
waterStore water tosend to homes

Advanced wastewater
treatment equipment

Filtration
tank

Disinfection
systemFiltrate
tank

Water
distribution tankReuse as horticulturalsoil and cement

Dehydrator

SludgeReduce moisture indischarge sludge discharge

Supplywater
To town

Squeeze out
more moistureRiver

Development facility

Water treatment technology

accelerating, including global warming, climate change, and frequent wind and flood damage.
Discharge

In continuing to make sincere efforts to tackle these issues, according to our research we currently supply equipment to 37% of water

Sterilize and disinfectwith chlorine, etc.

Sink clumps of
microorganisms

Decompose dirt throughthe work of microorganisms

Sink minutewaste

Sink andremove sand and waste

Disinfection
tank

Final
sedimentation tank

AerationtankPrimary
sedimentation tankGritchambertreatment plants and 43% of sewage treatment plants domestically.
development required by the times.

Disposalandeffective use

Thermal manipulation
technology

Sludgedehydration technology

Facilities for productionof fuel from sludge

Sludgedehydrator

Sludgethickener

Incinerate

Further compact
the moisture
into a semi-solid state

Reduce moisturein sludge

Wastewater(filtration)

Waste recycling
facilities

SludgeAs a company supporting water and environmental infrastructure, the METAWATER Group will continue to focus on the technological

To sewage treatment
plant through sewer pipes

Sewagetreatment plants

Resource
environment technology

METAWATER’S ESG

Since then, changes in the natural environment have been intensifying andSterilize

Maintenance and operations management for water and sewage facilities

and environmental infrastructure.
We were established in 2008, adopting the genes of both those companies.

Filter andclean water

Thickening
systemFuji Electric Co., Ltd., the METAWATER Group has been engaged in various
technological development for over 50 years as a company supporting water

Catch colors and smells

Separation and recycling of plastics,
incombustible materials, etc.

Changes in the development of new technology (2007 to present)
METAWATER established2007

Technology
Water
treatment plants(Year)

2008

2009

2010

2011

Development of new technology through electromechanical fusion
Japan's first PFI
Kawai Purification Plant

Water purification technology

2012

2013

2014

2015

Development of new technologies for reuse and recycling of resources, as well as higher functionality
First delivery of
UV disinfection equipment

2016

2017

2018

2019

Development of technologies to respond to climate change and the environment

First delivery of mobile Ceramic
Membrane Filtration Equipment

First delivery of LED UV
disinfection equipment(water supply field)

Ozone technology

Began verification of
sewage reuse system

Developed glass lining typeozone generation tubes

Developed high air-concentration both side cooling ozone generation tubes
First delivery of new diffuser plate for ozone

Water treatment technology

First delivery of high-speed sewage
treatment systems for wet weather

First delivery of multi-wing vertical-axis agitator
First delivery of sewage water reuse system

Pre-treated Trickling Filtration (PTF)
High-speed filtration technology using floating media
Simultaneous nitrification and denitrification treatment (deep tank type)

Sludge dehydration technology
Sewagetreatment plants(sewage field)

Phosphorus recovery fromincinerator ash (2006)

Thermal manipulation technology
B-DASH Project*(Breakthrough by Dynamic. Approachin Sewage High Technology projectby Ministry of Land, Infrastructure,
Transport and Tourism)

Waste recycling
facilities

Resource environment technology

Developed post-injection dual-liquid typebelt press dehydrator
First delivery of multi-layer fluidized incinerator
Delivery of world's first gasification furnace[FY2011] Energy management system using intensive
solid-liquid separation technology

Joint research into circulation-type multi-layer incineration
First delivery of kiln type carbonizing furnaceFirst delivery of dual heat source binary generator[FY2013] Innovative wastewater sludge energy conversion system that
optimizes overall dehydration, combustion, and power generation[FY2019] Advanced treatment technology through ICT and AI
control of single tank nitrification and denitrification process[FY2014] Non-aeration circulationwater treatment technology[FY2017] Technology increasing the processing capacityof final sedimentation tanks[FY2015] Water management technologies for urban areas subjected to local downpoursFirst delivery of waste plastic
specific gravity difference sorter

Development of compact high-speed rotary vertical crusher
First delivery of new counter-current trommel sorter

First delivery of improved
counter-current trommel sorter*B-DASH Project Abbreviation of Breakthrough by Dynamic Approach in Sewage High Technology Project. By accelerating research, development and commercialization of new technologies, efficiency of energy use and reduction 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 the water business. Consignees installed a full-scale plant in their sewage
treatment plants and demonstrated cost reductions, reductions in greenhouse gas emissions, etc.

37

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Environment

Main environmental technology
Water purification technology

Safe water purification system effective even in the face of climate change

Water treatment technology

Water treatment systems that reduce river and sea pollution in wet weather

High speed CSO filtration system

Our Ceramic Membrane Filtration System boasts the No. 1 market share in Japan forwater treatment plants utilizing membrane filtration systems. The risk of membrane
breakage is extremely low, it can be installed in small spaces, and it can also remove
protozoa, allowing for safe filtered water.
Thanks to its exceptionally long life, there is a minimal frequency of membrane
replacement. In fact, the first unit of this system was delivered over 20 years ago,
and it continues to operate to this day without having had the ceramic membrane
replaced yet. Additionally, it is expected to be used as ceramic materials after use,
leading to a significant reduction in waste.
Finally, only a low amount of pressure is required to filter raw water, and filtration
using differences in water level is possible as well, reducing the power needed bypumps, etc., and saving energy.

Combined sewer overflows have a negative impact on water quality andpublic sanitation at the discharge destination, as simple treated waterand untreated sewage are both directly discharged into public water
areas, such as rivers, during periods of rainfall. As such, with the 2004
amendment of the Sewerage Act enforcement order, measures to improvecombined overflows are being promoted throughout the country. This
includes the start of the "combined sewer system urgent improvement
project", which has the aims of (1) reducing pollutant loads, (2) ensuring
public health and safety, and (3) reducing refuse.
This system filters simply treated water and untreated sewage at highspeeds using our uniquely developed special filter medium, which is only
about 7.5 mm, filtering out refuse and pollutants such as oil balls andplastics at a rate of up to 1,000 m/day.
Additionally, existing primary sedimentation tanks can be remodeled
and set. Since it is easy to operate and maintain, it has been adopted as
one measure for improving combined overflow in Japan, contributing toenvironmental conservation measures regarding public water areas.

■ <Delivery results> Volume of water processed (cumulative)■ Japan(m3/day)

1,200,000■ Overseas

1,000,000

Special filter medium■ <Delivery results> Design treated water volume (cumulative)(m3/day)

5,000,000
4,000,000
3,000,000

METAWATER’S ESG

Ceramic Membrane Filtration System

2,000,000
1,000,000

800,0000
600,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018(Year)

400,000
200,000
0

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Water treatment technology

2018(Year)

Ceramic membrane

A mobile water treatment plant that is also active in times of disaster
Mobile Ceramic Membrane Filtration Equipment
This simplified Ceramic Membrane Filtration System, mounted on a truck,is easy to operate and maintain. Since it is mobile, it can be operated evenin areas where there are no skilled engineers. In areas that do not yet havewater piping laid, the truck can be moved to various water sources, such as
lakes, rivers, and wells, allowing that water to be processed and used as safe
drinking water.
Water transferred using piping requires a lot of energy, but since this system can moveon its own, it contributes to a reduction in transportation energy.
The system can also be used in the event of a disaster suchas an earthquake or heavy rain, thanks to the features of the ceramic
membrane that enables stable filtration of even high turbidity raw water.

System with the No. 1 market share, featuring significantly reduced power consumption

High integration configuration air diffusion system
The sewer system collecting and treating domestic wastewater uses
0.7% of Japan's total electricity consumption (equivalent to the annual
electricity consumption of 2.11 million households). Of that, approx.
50% of the electricity is used for sewage treatment in treatment plants.
When sewage is being treated, microorganisms decompose pollutantsin the sewage, sinking together with the fine impurities which are thenremoved. However, large amounts of air must be blown (diffused) into thesewage to activate the microorganisms.
METAWATER has developed a system that allows ultra-fine air to be
diffused through the use of ceramics technology, enabling high oxygen
transfer efficiency. Additionally, by reducing pressure loss when air isblown in, the power consumption required to operate can also be reduced
by approx. 30% compared to the conventional system.
The system is maintenance-free and has long-lasting performance,
earning it the No. 1 market share in Japan.

■ <Delivery results> Target water volume (cumulative)(m3/day)

4,000,000
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000

Mobile Ceramic Membrane Filtration
Equipment

1,000,000
500,000
02008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018(Year)

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Environment
Main environmental technology

Thermal manipulation technology

Activities for reducing environmental burdens

Thermal manipulation technology that converts waste into fuelPromoting energy-saving measures

Wastewater sludge fuel system■ Power usage (office)

The METAWATER Group has set a "goal of a 1% reduction compared■ Power usage ● CO2 conversion

to the previous year" with regard to office power consumption andis actively implementing office lighting reduction activities.

4,000(t CO2)

3,834

3,777

Various initiatives are being explored to reduce the amount ofmonitors are turned off when employees step away from their desk(energy-saving and security measures), and in addition to work-

Wastewatersludge fuelstyle reforms (introduction of a 4-day workweek, telecommuting,

2,223
2,100

2,113
1,866

2,000

1,900

1,700

As a result, our electricity usage in FY2018 decreased by 1.7%0compared to the previous year, and CO2 emissions were also

2014

2015

2016

2017

1,500
2018 (Year)

reduced by 0.9%.

800

Promoting paperless work environment and purchasing eco-friendly items

600

METAWATER’S ESG

1,000

3,582

1,000

asked to leave at a specific time and all the lights are turned off.
(t /day)

2,187

2,300

3,644

1,834

etc.), there are also "Super Refresh Days", where employees are■ <Delivery results> Treated capacity (cumulative)

3,000

3,787

CO2 conversion

electricity used. Lights are turned off during the lunch break, PC

Power usage

As a general rule, sewage sludge in urban areas is dehydrated to reduce
the amount of moisture present and then incinerated. The ash generated
from the incineration is effectively used as a raw material for cement, etc.
METAWATER's "wastewater sludge fuel system" is a technology that
produces fuel (carbon) by steaming and incinerating sewage sludge. The
fuel produced is valuable and can be sold, and is effectively used as analternative fuel source to coal in thermal power plants, etc.
There are high expectations for wastewater sludge fuel to be a neweffective use of sewage sludge.

(1,000 kWh)

400

The METAWATER Group has abolished the paper-based distribution of meeting materials at executive meetings since FY2013, introducing
2000methods for viewing materials on tablets. This meeting format has already been introduced at other general meetings, as we continue
2008

2010

2012

2014

2016

our work to achieve a paperless work environment throughout the company. At the same time, we are also working on purchasing eco-

2018
(Year)

Resource environment technology

Initiatives regarding industrial waste

Improved plastic sorting efficiency and accuracy

Domestic waste recycling system(office and domestic construction work) varies depending on the■ <Delivery results> Treated capacity (cumulative)■ Scrap glass, etc.

■ Wood scrap■ Other

28,51825,000were 2.4-times that of the previous year. The amount of metal andbeen continuously implementing departmental education with the■ Mixed waste, etc.

■ Waste plastics

30,000water treatment facility improvement work, etc., and emissions
wood scrap increased as well. Under such circumstances, we have

■ Sludge(t) ■ Metal scrap

In FY2018, rubble increased significantly due to an increase in

20,00015,000aim of promoting proper processing and reuse by strengthening

10,000management of industrial waste processing, and in doing so have

5,000

18,314
14,45915,707
11,797

achieved a rate of nearly 100% for recycling of such waste.
0

2014

2015

2016

2017

2018 (Year)(t/5H)

500

Promoting the adoption of electronic manifests

400
300

We are continually strengthening our monitoring efforts through improving operation efficiency, visualizing the processing status,
200

selecting service providers that support electronic manifests, and adopting an advance application process for using a paper-based
manifest. However, due to factors such as the need to use paper-based manifests in local situations, etc., the adoption rate in FY2018100

was only 98.3%, a 1.2% decrease compared to the previous year (the rate nationwide in FY2018 was 58%). Moving forward, we will
2008

2010

2012

2014

2016

2018
(Year)METAWATER REPORT 2019

■ Rubbletype and amount of construction work each year.

041■ Changes in industrial waste emissions (by type <within Japan>)

The amount of industrial waste generated by business activities

Emissions

The amount of waste plastics generated in Japan is said to be over
9 million tons a year, accounting for approx. 2% of all waste. Waste
plastics are subject to import restrictions by countries such as China, andmarine pollution, etc., caused by microplastics has attracted attention
as a major social and environmental problem. In addition to reducing
emissions, the importance of recycling resources is also becoming more
important. However, in order to recycle waste plastics, in addition to themanual removal of refuse required, lightweight items such as plastic
bags, and heavy items such as detergent bottles, need to be separated.
To improve the recycling rate of plastics, over the past many years the
METAWATER Group has been developing equipment that improvessorting efficiency and accuracy in manual sorting work using differencesin specific gravity.
Since the risk of explosions or fires caused by contamination of items
such as spray cans and lithium batteries is increasing at crushing andsorting facilities, we are also contributing to facility safety through thedevelopment of a system that prevents the spread of fires, detecting andextinguishing them quickly in the event of an accident. As of FY2018,
approximately 300 of our domestic waste recycling systems have beendelivered.

friendly items, and have replaced all internal-use paper with forest-certified paper.

continue to improve the adoption rate of electronic manifests while taking into account local situations and other similar factors.

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SocialWork-style reforms are the key to corporate competitiveness

Focus

Aiming to become
the best company atwhich to work

The METAWATER Group has entered its third year for work-style reforms, and the environment for realizing various styles of work
is steadily taking shape. As a water and environmental infrastructure company, it is our belief that these work-style reforms areindispensable for the sustainable growth of the Group, as quality human resources are the key to corporate competitiveness.
In order to become a company full of active, diverse human resources, we are creating an environment and climate that enables

Under the management policy that "people are our greatest asset", the
METAWATER Group is actively working to achieve a life-work balance while
also respecting all aspects of diversity, from human rights to employment.

Executive officer
Deputy Executive General Manager,
Corporate Strategy Planning Division
Executive General Manager, HR &General Affairs Planning Office
Responsible for CSR Planning Office
Responsible for Risk Management

Michio Fujii

all differences, be it age, gender, personality, disability,

The METAWATER Group is promoting various work-styleenthusiastically it will lead to company growth.

reforms, including satellite offices and telecommuting,

We believe that being a company with many diverse

with the aim of achieving a "life-work balance" that

employees who all work enthusiastically is an important

allows employees to choose a style of work that suits

part of attracting others who want to work with us.

nationality, etc., believing that if everyone can work

their lifestyle.
has changed dramatically due to a declining birthrate,

Communication is the key to becoming thecompany people most want to work foraging population, shortage of human resources,

The key to becoming the company people most want todevelopment of IT, and a diversification of values

work for is communication. If the use of satellite offices

regarding lifestyle. It is amongst these changes thator telecommuting becomes part of the natural work

we have removed the existing concepts of working

environment, conventional communications methods will

styles, such as work hours and locations, creating an

also need to change based on the fact that people won't

environment where employees can choose a working

be face-to-face at the same workplace at the samestyle that suits them in particular. We believe this leads

time. As such, we are also focusing on infrastructure

to happier and more highly motivated employees thatdevelopment for that purpose. On the other hand,

see the value in their work.

some people have difficulty using the existing system

For example, if an employee with a young child can work

depending on the type of job, work environment, etc.

remotely, choosing a place and time that works for them,

To ensure that everyone can work enthusiastically, we

we are convinced that it is beneficial for the individual,

will continue to evolve the existing system throughthe family, and the company as well.

communication with our employees, knowing that we

The relationship between companies and their employees

styles, we are also working to reform awareness of mutual respect.

Three methods for realizing numerous diverse work
stylesUp to now, we have promoted introducing a telecommute system,
establishing satellite offices, and 4-day workweeks.
For the telecommute system, there are no restrictions on usage
requirements, working locations, or frequency of use, so that all
employees can work from anywhere. We are promoting various
initiatives such as "Telecommute Trials" and "Telecommute Weeks" forall employees in order to foster a climate where the system is easy touse. Thanks to these initiatives, many employees are now using thetelecommute system.

■ Satellite office locations● Completed satellite offices● Planned satellite offices

Yokohama
TachikawaFukuoka
Chita

Hino

NagoyaOur aim for 4-day workweeks is to create input opportunities outside ofwork. Using this newfound time, employees each grow as an individual,
and the company aims to grow as well by multiplying those individual
results. It is a system that makes it easy to secure time outside of work,and can be used for volunteering, self-study, family services, spendingtime with friends, trips, and more.
The highly utilized Tachikawa remote office (65 to 70% occupancy)

Creating an environment where everyone
can work enthusiasticallyIn addition to work-style reforms and promoting

Efforts that enable employees to choose a style of work

viewpoints, working on enhancing ability development

according to their own individual circumstances andsystems to help employees grow, health management to●

Periods normally reserved for commutes can instead be used for self-study, etc.

support mental and physical health, safety management●

Since we can work where we want, we can now take advantage of downtime using cafes, etc.

so that employees can work with peace of mind, etc.

●

Productivity has increased as I can change my workspace depending on the details of the work.

●

My work schedule has become much more flexible.

●

I'm much more aware of time management now.

The METAWATER Group recognizes the individuality of

Omiya
Manseibashi

For satellite offices, the "Mid-Term Management Plan 2020" states that
we will establish 10 locations nationwide. We have already establishedseven of those locations (Sendai, Manseibashi, Tachikawa, Hino, Nagoya,
Osaka, and Kobe). By installing PCs in some of the satellite offices,
employees can come to these offices without needing to prepare any
equipment on their own. Thanks to measures such as this, the number ofusers is steadily increasing. Moving forward, we will continue to promote
the establishment of four more bases and look into the use of sharedoffice services, which will lead to effective use of downtime, reduced
commuting times, and more.

will never stop on a "completed form".

values are also important in promoting diversity.

SendaiOsaka
Kobe

METAWATER’S ESG

A "life-work balance"* that allows employees
to choose their working stylemore diverse work, where each employee can find what work-style reforms work best for them. In recognizing these diverse work

diversity, we also try to see things from various other

Employees' feedbacks*We use the term "life-work balance" based on the belief that having a fulfilling life leads to better work performance.

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SocialInitiatives for supporting individual achievement

To be a company where everyone can work enthusiastically

People are the greatest asset of the METAWATER Group, and so the development of their skills is positioned as one of our most

We promote diversity based on the belief that the abilities of various employees with diverse personalities will lead to the growth

important management themes. This is because they are the greatest source of management resources and corporate value.

of the Group. In addition to expanding the system to accommodate a variety of human resources, we are implementing measures

In accordance with the HR philosophy of "supporting personnel who desire to develop themselves, providing them with opportunities

such as creating rewarding environments where employees can improve their careers.

to develop competency", we are creating a culture of self-learning, building an environment that respects employee individuality andallows them to effectively develop their abilities and potential autonomously.

Efforts to enhance education for each occupation

A variety of training programs are held with the aim of identifying rolesand developing skills in accordance with employees' growth stages.
In addition to training by rank and nomination, we support the growthof each employee through elective training focused around the idea of
autonomous and voluntary learning.

In order to promote the development of abilities for all employees, wehave established an Ability Development Committee to formulate priority
policies and follow up on various educational situations.
The committee has nine specialized working groups (WGs), each ofwhich plans, develops, and implements specialized education based on
the job type. The PDCA cycle for effective education is looped through byproviding regular opportunities to exchange opinions between the WGs.

By rank
Officers

Common Training Promotion WG

International Staff Development WG

Procurement WG

Sales WG

PPP WG

Service WGConstruction & FE WG

Development WG

Technology & Design WG

Various courses based on specialty

Implementation at each workplace /dispatch to external seminars

New employee
training

Individual WGs ofAbility Development CommitteeNew
employees

Follow-up
training

Internal/external group training /correspondence course(2 to 3 years withthe company)

Since METAWATER was established, we have introduced an impartial
personnel system that is not bound by personal factors such as nationality,
and we regularly recruit foreign employees and accept employees fromoverseas sites (national staff).
In order to develop personnel who can lead the growth of overseas
business, we are working to strengthen the language skills of young
employees and promote cross-cultural understanding through OJT with
ODA projects, as well as collaborations with overseas subsidiaries andpartner companies. We will continue promoting the next generation
personnel to expand our overseas business.

A round-table discussion was held centered around male and female
employees with childcare experience, allowing them to talk about both workand personal matters. In recent years, the number of male employees who
have taken childcare leave has increased, and male participants haveinquired about how they can balance childcare and work.
In addition, exchanging opinions from the viewpoints of both men andwomen deepened mutual understanding, leading to more meaningful
discussions in working toward a workplace where everyone is more
comfortable.

Ability Development Committee
Internal/external group training

Manager training
Promotional training

Mid- to
BP/SP Promotional
senior- leveltraining
Junior employees

Specialized
Workplace By specialty
by job type

Officer training

General General Manager
training
Managers
Managers

Nomination Optional

Round-table discussion on the theme of "childcare
and career" for both male and female employees

Cultural understanding with overseas OJTMETAWATER’S ESG

Ability development system diagram

Aiming to be a company where various humanresources can play an active role in operations"Childcare and career" round-table discussion

Becoming a company where employees with disabilities can play an active role

Support for self-development through optional training
This system allows employees to attend training for business skills on a voluntary basis, selecting from over 200
courses, from group training to correspondence courses. This allows them to work in accordance with their own issues.
Every year, more than 800 employees, including those from group companies, take advantage of these courses,
allowing for interaction between employees in addition to learning.

■ Types of elective training
Elective training

Group
集合研修
training

Correspondence
集合研修

External training

Training taken together with participantsfrom outside the company

Internal training

Training for Group company employees

Brochure for optional training
courses

Daily morning meeting

Another initiative for promoting diversity is to create an environment where people withdisabilities can play an active role in the company. Employees with disabilities are engaged ina wide range of activities, taking up responsibility for various tasks in numerous departments.
Every morning, instructors (vocational life instructors for persons with disabilities) check thehealth of each member at the morning meeting and during exercise periods, deciding upon
their work assignments for the day by taking their condition into consideration.
The recent work converting internal documents to PDFs has contributed to the promotionof telecommuting, one of our work-style reforms. Positive feedback results in expanded
requests for work and more opportunities for active participation in the company.

Common internal work

Choosing courses to attend based on individual desires

Creating business cards for employees; sorting, collecting, and distributing internal
mail; preparing meeting and training rooms; lending out projectors and otherequipment; managing and sending out company-wide catalogs; etc.

Participant feedbacks
I learned a number of things from optional training, and it lets me think objectively about work issues, which leads to good awareness. There
are various themes, so each year I'm trying to take courses based around a different self-development theme.

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METAWATER REPORT 2019

Department work
Converting internal documents to PDFs

Converting internal documents to PDFs; organizing and filing expense slips; aggregating anddigitizing handwritten questionnaires; creating various materials; sending out purchase orders; etc.

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SocialInitiatives for promoting better health

Safety and hygiene initiatives

We believe that people are our greatest asset, and as such the METAWATER Group has established various support systems for the

Based on the basic policy for health and safety management, the METAWATER Group is working to create a work environment

mental and physical health of employees and their families. It is our belief that promoting the good health of each employee leads

where employees can work safely without worry of work-related disasters, illnesses, or traffic accidents.

to improvements in corporate vitality, and so we will continue promoting health management.

Health management system
The METAWATER Group has established health management centers at our head office, as well as in Nagoya, Osaka, and other offices. This allows
professional physicians, psychological counselors, and dedicated health management staff to follow up with employees promptly and whenever it
is needed. We conduct individual interviews and give health-related guidance throughout the year so that employees themselves can maintain andimprove their health.

Basic policy for healthand safety management

Management has adopted a firm position under the philosophy that "No one will get
injured or injure others". Through this, all METAWATER employees and subcontractors work
together to comply with relevant laws and regulations and prevent occupational and traffic
accidents, creating a work environment where people can work healthily and comfortably.

Improving health awarenessDue to declining birthrates, an aging population, and a shortage of labor, it is
becoming more common throughout the world to work until the age of 65 or 70. As
such, proper health management from an early age is becoming more important
than ever. METAWATER carries out "health-care activities" and gives "healthadvice" with the aim of ensuring that employees can continue to work healthilyand enthusiastically. "Health-care activities" include various events tailored to
employees' occupation, age, physical condition, etc., such as exercise or meal
seminars that can be incorporated into everyday life and health education for specificage groups. In FY2018, approximately 700 people participated in these activities.
Additionally, health management staff travel around the country, talking one-on-one
with employees and giving health advice.

The METAWATER Group has established its own "Local occupationalsafety and health guidelines" that can be used as a guide for health andsafety rules for local construction and work. The Group's health and safety
rules are based on the Safety and Health Act, and are compiled into asingle volume that is revised annually in response to legal revisions, etc.
Every year, guideline education is held for employees, explaining thecontent of the manual and giving case studies. By making this education
mandatory for all employees involved in field work, we are continuously
working to instill and share health and safety rules.

Giving health advice through personal interviews

Mental health care
In order to prevent mental health issues from arising, we have e-learning classes such as "line care education" for employees at management
positions and "self-care education" for all employees. In addition, a "Mental Health Handbook" is distributed to all employees to encourage a correctunderstanding of mental health.
The work-style reforms promoted by the METAWATER Group are being promoted in conjunction with various mental health care initiatives with the aimof reducing commuting stress and improving "life-work balance".

Expanding health and safety education
The METAWATER Group insources health and safety education for therules and regulations required for work.
The courses listed to the right are always available so that not only
new hires fresh out of university, but also mid-career hires that are
expected to go straight to work, can get the training they need in atimely manner. We are continuing to improve the content of thesecourses and train instructors.

METAWATER’S ESG

Mandatory guideline education and theestablishment of local safety and health rules

BookletGuideline education explaining
health and safety rules

Foreman / health and safety manager training
General health and safety manager training● S pecial education related to hazardous work: hypoxia and hydrogensulfide poisoning● Special education for dioxin exposure prevention work
● Special education for handling high voltage or special high voltage electricity● Special education for handling low voltage electricity● Special education for work using full harness safety belts● Health and safety education at the time of employment● Preliminary education before being dispatched● Heat stroke prevention education for operations managers●●

Additional company driving license requirements
and safe operation of business vehicles
The METAWATER Group has established an internal driving license
system for vehicles used for business, allowing us to issue andcheck driving histories, appropriateness, etc., for each employee.
Since FY2018, yearly driver training classes have been added as arequirement for an employee to renew their company driving license.
Drivers from various work sites also participate in monthly KY*
training activities, looking back on their own driving performanceusing self-diagnosis sheets. Additionally, we are systematicallyworking to ensure safe daily operation by having managers decide
on if vehicles should be used depending on the weather, providing
support through the introduction of safety devices such as driverrecorders and automatic brakes, etc.

Driver training for renewing company driving licenses*KY activities: KY stands for Kiken (danger) and Yochi (prediction)

47

METAWATER REPORT 2019

METAWATER REPORT 201948

S

SocialQuality initiatives

CSR procurement

The METAWATER Group has a basic quality policy, which is to ensure that all of its products
and services meet optimal quality standards to satisfy its customers, always aiming to leave

Goals
Zero serious accidents● Continual quality
improvement

The METAWATER Group promotes procurement operations based on three basic policies: promoting transparent procurement,
strengthening partner relationships with suppliers, and promoting CSR procurement.

●

customers further fulfilled.
In order to maintain quality, preventing accidents is essential.
Plant risk assessment education is one of the activities that the Group carries out to achieve this.

Preventing equipment accidents through plant risk assessment education

Promotion of transparent procurement – 98 new suppliers
The "Inquiries about purchasing and dealings" form is posted on our corporate website, and we
provide fair and equitable entry opportunities to all business partners. We launch new transactions
with around 100 companies every year. The number of new corporate business partners in FY2018
was 98.

In order to prevent serious accidents and failures, the METAWATER Group conducts a PRA (Plant Risk Assessment) for each operation
process, striving for continuous improvement.

Detailed design

PRA

PRA

Procurement

Production

Inspection

Field adjustment
PRA*EDI: Electronic Data Interchange, a framework supporting electronic business transactions

PRA case study education was held for the service department to prevent worst
case scenarios from coming to pass. The theme of this training was education on

Promotion of green procurement

water distribution and chemical injection facilities, issues with which could have

The METAWATER Group is promoting the procurement of eco-friendly office supplies (products with socially recognized eco-friendly marks such as the Eco
Mark and Green Mark).
Efforts were strengthened for 12 frequently used items in particular, including copy paper, business cards, and highlighters, which were designated as green
procurement promotion items. In FY2018, the green procurement rate for these items reached approximately 94%. We will continue efforts to improve thegreen procurement rate throughout the entire company.

significant impacts on the lives of ordinary citizens. Employees from all relevant
departments were subject to attend.
This course targeted a broad audience ranging from junior to veteran staff.
Teams held discussions with members from different locations that they normally
do not have a chance to speak with. In addition to gaining an understanding of

The METAWATER Group promotes the implementation of EDI. In addition to improving the accuracy and efficiency of procurement operations, we arepromoting implementation of EDI with the understanding and cooperation of business partners to work on becoming paperless, reducing our impact
on the environment. Introduction of EDI began with development-related and in-house equipment orders, and as of FY2018 approximately 50% of
orders were through EDI.
This made the paper used traditionally in order forms, invoices, etc., unnecessary, leading to a reduction of approximately 30,000 sheets. Likeus, our suppliers have also eliminated invoices and envelopes, leading to a paperless environment.
We will continue expanding the scope of transactions and applications for EDI, aiming to further improve operating efficiency and reduce our environmental burden.

METAWATER’S ESG

Enhancing paperless operations through EDI*

■ Operation processes for plant construction
Basic design

Business negotiations

PRA education course

the necessity of preventing equipment accidents and discovering that risks andcountermeasures are perceived differently by various groups, it is also an
opportunity for attendees to take notice of what skills and knowledge they are

Legal compliance
We actively promote participation in social insurance for construction work, etc. Enrollment in social insurance, etc., is thoroughly enforced by ensuring notifications
are sent to suppliers, providing instructions for clarifying statutory welfare expenses in estimates, exchanging opinions with individual visits, and more.

lacking through group discussions. As a result, equipment accidents in target
departments have been reduced.
Nevertheless, we plan to provide education on the importance of plantmonitoring to lead to early detection, preventing important points that could leadto an equipment accident from being overlooked.

Feedbacks from the Departments having implemented PRA Education
This PRA case study course was carried out for each of the four sections in the service department (for electrical equipment), so we were able tolearn about the different attitudes and opinions of the other groups regarding the prevention of equipment accidents. Group discussions were held
between junior employees and with other group members to create new awareness for everyone participating, resulting in improved awareness andskills for employees in all four sections.
Since last year, the service department has been carrying out their daily operations with their highest priority goal being the elimination ofoccupational accidents, equipment accidents, and automobile accidents. By continuing to work with the Quality Assurance Office, we hope that the
products and services we provide will continue to satisfy customers and fulfill their needs.

49

METAWATER REPORT 2019

Thorough enforcement of internal education
We hold study sessions on the “Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors” for all employees in charge of purchasing,ensuring thorough compliance and promoting understanding.
We also offer e-learning courses for other employees to strengthen compliance throughout the company.

TopicsFirst partners meeting held
Suppliers are important partners for the METAWATER Group to develop our businessand provide customers with products and services that have consistent quality anddelivery times. We build relationships of trust through daily dialogs with our suppliers.
In 2018, the 10th anniversary since establishing the Group, we expressed our gratitude
and invited suppliers to a partners meeting that we hosted. Approximately 600 people
joined the meeting, and we were able to accomplish deep and meaningful exchange.
We will continue to build better relationships now and into the future.

10th anniversary partners meeting

METAWATER REPORT 201950

S

SocialSocial contribution

Contribution to local community
At the METAWATER Group, we think it is important to interact with the local community, and as such we are engaged in various local
contribution activities, such as uchimizu (water sprinkling), cleaning up towns and rivers.

Education/socialeducation

METAWATER's policy on social contribution activities
The METAWATER Group's social contribution activities contribute to the realizationof a sustainable society by solving social issues through water and the environment.

Support forareas hitby disaster

METAWATER's guidelines on social contribution activities
 e will improve water-related environmental improvement activities and waterWand environmental awareness activities.
● We will value cooperation and collaborations with various stakeholders.
● We will foster awareness for voluntary employee participation.

Five
major areas

Environment
preservation●

International
support/exchanges

Cleanup activities at each of ourbusiness locations

● 

Local
contributions●

METAWATER Uchimizu Daisakusen

Every year in front of our head office, METAWATER holds
an uchimizu (water sprinkling) event using sewage water
reclaimed from the Shibaura Water Reclamation Center inTokyo, which has adopted our technology.
This annual event allows visitors to experience thecoolness water sprinkling can provide together with local
communities, associations, sponsor companies, nurseryschool toddlers, and others just passing by.

The Group holds cleanup and beautification activities
around each of our offices, monthly and several times
throughout the year. In FY2018, we carried out these
activities at 44 locations nationwide.
FY2018 cleanup areas

company, protecting the water cycle is our mission. We are promoting social contribution activities so that people from allwalks of life can gain an understanding of the importance of water and the environment.
We act with the aim of contributing to society and the global environment through both business and social contribution
activities through the lens of water and the environment.

Uchimizu Daisakusen event held in front of the head office

METAWATER’S ESG

The METAWATER Group handles "water", a natural resource indispensable for life. As a water and environmental infrastructure

Education/Public education
The METAWATER Group provides classes on the water cycle and environment preservation at schools and event locations, teaching
through the technology and skills we've acquired through our main business, water and the environment.
●"METAWATER On-site Lessons for Children"

On-site lessons regarding the water cycle are provided to children, as they willbe leading the next generation.
In FY2018, we visited 357 children at five schools, providing lectures andfiltration experiments showing the importance of water and how it is used.

Okinawa cleanup activities

On-site, hands-on lessons at the Shirakami-sanchi
World Heritage Conservation Center● We held hands-on lessons for elementary students at Shirakami-sanchi,a world heritage site. They were collectively titled the "Shirakami Water
Adventure", and consisted of an adventure in the local forest, sandfiltration experiments using plastic bottles, etc.

International support/relationships
As part of creating a community where multiple cultures coexist, the METAWATER
Group promotes international support and exchange activities that take care of
local needs.

Phnom Penh sewer adoption and enlightenment activities

Support for disaster recovery and restoration
The Group conducts its own disaster relief activities and reconstruction support events.
Lesson given at Miura City Misaki Elementary School in Kanagawa Prefecture

Lesson given at the Shirakami-sanchi World Heritage Conservation Center

Environment preservation
The METAWATER Group promotes Satoyama Conservation Activities, which aim to conserve forests and biodiversity in order to nurture

Donations for the heavy rains in west Japan andthe Hokkaido Eastern Iburi earthquake

Onagawa-cho reconstruction support project● ●

In July of 2018 we donated to help support relief efforts for the landslides
caused by heavy rain in west Japan that same month, as well as for the
Hokkaido Eastern Iburi earthquake that occurred on September 6, 2018.

We took part in both the "Onagawa-cho Fukkosai Festival" and the"Onagawa Saury Harvest Festival" in Miyagi Prefecture.
To support the special products of Onagawa-cho, every year we hold aninternal sales event throughout the company to show our support.

and protect water forests.
●

Forest conservation activities

We hold forest conservation activities at four locations across Japan, primarily in Okutama, Tokyo. At the"METAWATER Okutama Forest", we hold water forest conservation activities jointly with the NPO Green
Earth Center, planting trees and clearing undergrowth every year.

Okutama forest

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METAWATER REPORT 2019

Donations for the Hokkaido Eastern Iburi earthquake

Onagawa-cho Fukkosai Festival

METAWATER REPORT 2019

52

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
METAWATER Group opts for an arrangement of a Board of Auditors as an organization design based on the Companies Act. The Board of Directors makes

Basic concept of corporate governanceimportant decisions related to management and supervises business execution. At the same time, auditors and the Board of Auditors independent from the Boardof Directors audit the status of directors' execution of their duties and the like. For the purpose of strengthening independence, objectivity, and accountability

So that we can grow sustainably with society, we are committed to improving our internal control based on our corporate mission. We

for the function of the Board of Directors related to the nomination of candidates for directors and auditors, determining renumeration for executive officers

are aiming to be a group trusted by society through our continuous contribution to it while meeting the expectations of our stakeholders

and directors, etc., a Nomination and Renumeration Advisory Committee has been established under the Board of Directors. Furthermore, METAWATER Group

including customers, local communities, shareholders and investors. To realize this aim, we are engaged in improving the following

has introduced the Executive Officers System to accelerate management-related decision-making, reinforce functions to monitor business execution, and clarify

aspects of corporate governance.

responsibility. Additionally, a 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.

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.
As a basic policy of the METAWATER Group based on the rules of the "Corporate Governance Code" (hereinafter "CG Code") stipulated by the Tokyo Stock Exchange on June 1, 2015, the Group established the "Basic
Policy on Corporate Governance" (hereinafter "CG Basic Policy") on November 27, 2016 (updated November 29, 2018), and disclosed the policy on the corporate website.
https://www.metawater.co.jp/csr/responsibility/pdf/governance.pdf

Appointment/
Dismissal/Approval

Report/Submission

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

Board of Directors Meeting
Advice/Proposals

Consultation

Nomination and
Renumeration
Advisory Committee

Report/Submission

Appointment/
Dismissal/Approval

Appointment/
Dismissal

Board of Auditors Meeting

Audit
Supervision/Appointment/
Removal/Approval

President and Representative Director
Report/Proposal

Report/submission

Accounting Auditor
Cooperation

ReportAuditing Office

ApprovalManagement Meeting

METAWATER’S ESG

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.

Internal audit

ReportApproaches to improve corporate governance
1

CSR Committee

Framework of directors

Report/Proposal

Approval

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.
●

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.

Board of Directors Meeting
The Board of Directors meetings, held on a monthly basis and also as needed,
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, as a basic rule, three auditors attend theBoard of Directors meeting and express their opinions whenever necessary.

●

2

Response to Corporate Governance CodeMETAWATER was listed on the First Section of the Tokyo
Stock Exchange Market in December 2014. As the CG Codewas established in June 1, 2015, the group implemented
the measures stated on the right. We are committed tomoving forward with corporate governance also in future.

November 2015

June 2016●

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)●*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.

53

46th ordinary general meeting of shareholders

METAWATER REPORT 2019

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)

November 2018
November 2018●●

Revised the CG Basic Policy in accordance with partially revised
securities and listing regulations
Established Nomination and Renumeration Advisory Committee

Board of Auditors Meeting
The Board of Auditors meetings are held on a monthly basis and function
to monitor management. The Board of Auditors is comprised of threemembers including two outside auditors. Auditors are selected from thosewith expertise and experience regarding our business as well as in legal
and financial affairs. The Board of Auditors determines the audit policies
and scope of work for each auditor, as well as specific action plans andschedules, and monitors the status of business execution by directors.
Nomination and Renumeration Advisory Committee Meeting
The Nomination and Renumeration Advisory Committee was establishedunder the Board of Directors as a voluntary advisory body that functions
as both a nomination committee and renumeration committee. Thesemeetings are held as necessary, deliberating on matters related tothe appointment and dismissal of directors, auditors, and executive
officers, as well as renumeration for directors, executive officers, etc., in
consultation with the Board of Directors, and also providing advice andproposals to the Board of Directors. The committee is comprised of six
members total, including the Director and President, three independent

outside directors, and two independent outside auditors, with anindependent outside director selected as the chairperson.
Executive Officers System
The Executive Officers System has been introduced to acceleratemanagement-related decision-making, reinforce functions to monitor
business execution, and clarify responsibility. The executive officers arecomprised of fifteen members including four directors and executive officers.
Their term of office is one year and their appointment, reappointment, anddismissal are determined at Board of Directors meetings.
Management Meeting
The Management meetings consist of fifteen executive officers and, asa general rule, are held twice a month. In these meetings, reports are
given and discussions are held regarding important management-related
matters stipulated in our official competence rules. Standing auditors
attend the meeting and express opinions as necessary, monitoring thestatus of business execution by the President & Chief Executive Officer aswell as those executive officers below him.
CSR Committee Meeting
CSR Committee meetings are held twice a year, with a function ofpromoting compliance and reinforcing internal control. The CSR Committee
has seven subordinate working groups under it. The committee is comprisedof fifteen members, including the chairperson and fourteen committee
members. Details of the CSR Committee's activities are reported to theManagement Meeting and Board of Directors Meeting as needed.

METAWATER REPORT 201954

G

GovernanceCorporate governanceInterview with Outside Director
Outside Director’s roles
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

Reasons for selection by individual
Reasons for selection

SusumuSakabeOutside Director

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.

Motofumi
MatsumuraOutside Director

Outside Director

Keiichiro Sue

Kaoru
AizawaFumikoKosao

Kimihiko
UemuraKazuo
Takimoto

55

Independent
Director

Outside Director
Independent
Director

Outside Director
Independent
Director

Outside Auditor
Independent
Director

Outside Auditor
Independent
Director

METAWATER REPORT 2019

Mr. Matsumura held important positions at Fuji Electric Co., Ltd. and has a wealth of management experience as well as 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.
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 him to have nopotential 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 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 him to have nopotential 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 him to have 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 also fulfills therequirements of an Independent Director stipulated by the Tokyo Stock Exchange, we consider him to have no potential conflicts ofinterest with general shareholders, and have designated him as an Independent Director.
Mr. Takimoto is well versed in corporate taxation as a certified public accountant and tax accountant. With a wealthof experience gained through his position as an outside director of another company, he has balanced and broad
perspectives of industries related to the Company. We consider him to have the required skill set to supervise theexecution of the business of the Company by leveraging his extensive experience of finance and accounting, as well as
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 also fulfills
the requirements of an Independent Director stipulated by the Tokyo Stock Exchange, we consider him to have nopotential conflicts of interest with general shareholders, and have designated him as an Independent Director.

Outside Director

Kaoru Aizawa—— I t h a s b e e n t h r e e y e a r s s i n c e y o u w e r e—— What is necessary for sustainable improvement

appointed as an Outside Director. What are yourof corporate value?

overall impressions regarding the management of theI think the METAWATER Group has a unique feature that

Board of Directors, state of discussions, etc.?

is not shared by other companies: a fusion of electrical-,Lively opinions are always being given, and the board

machinery-, ICT-, and maintenance-based know-how.

operates in a good atmosphere. Moreover, I think it is

Another important strength is how they maintain highwonderful that the board members are diverse and that

quality in each field. However, as things continue to shift

they exchange opinions as experts of their various fields.

from the public to the private sector, and also taking into

With this last year in particular, our 10th anniversary, I feel

consideration the importance of water demand overseas,

like the company is changing dramatically. It's great thatthe value of not just hardware such as equipment, but

lively opinions are exchanged while also being aware ofservices using networks, etc., should increase. I believe

where to change, what to change, and what not to change.

that people hold the key to the quality of a company, and—— Please tell us about your role as an Outside
Director.

METAWATER’S ESG

Corporate title

The METAWATER Group will drastically change toachieve its long-term vision.
In order to change and respond to these changes,
I try to give advice and opinions from the perspective ofan Outside Director.

so I would like to see ongoing development of humanresources who can play an active part in the world being
promoted by the METAWATER Group.

I was previously involved in training and education for
management personnel of the METAWATER Group. It was—— What are your expectations with regard to social

during this time that I started to experience the culture andissues (SDGs, etc.)?

warmth of the people of the METAWATER Group, which

It is important to address social issues such as the SDGs.

led me to take on the role of an Outside Director. In thisI recognize that the METAWATER Group exists to solve arole, I hope that I can use my experience and knowledge

major one of those issues, water and resources. All overto help expand the Company. However, it is important to

the world, there are millions of people who become sick or

watch over the Company as well. Being part of the samedie because they don't have access to clean water. I hopeculture, you may miss, overlook, or simply not care about

the METAWATER Group can make full use of the powercertain things. An important role of Outside Directors is tothey have available so that safety and security can begive advice to be aware of these points from a third-party

spread far and wide.

perspective.
—— What are your thoughts on the governance of—— What are your future aspirations as an Outside
Director?

the METAWATER Group?

I want to give opinions and advice from a different

I think that the governance system and strengthening ofperspective than those inside the Company so that eachthat system are being addressed sincerely and thoroughly

and every employee of the METAWATER Group can work

as a whole. However, when you think that something is

comfortably and continue to contribute to sustainable

good enough, that is when many things start to breakcorporate development and society. I would like todown and deteriorate. Therefore, I will try to move forward

participate from a standpoint outside of the Company withwhile asking myself, "Is this really good?" endeavoring toa grasp of the overall picture.

give advice to increase the transparency and objectivity of
governance.

METAWATER REPORT 2019

56

G

GovernanceManagement organization(As of end of June 2019)

METAWATER’S ESG

❻

❽

❿
⓬
❹

❺

❷

❼ ❾
❶

⓫
❸

Directors
1 President and Representative Director

Yasushi Nakamura

Auditors
5 Outside Director

Susumu Sakabe

Executive Officers

10 Audit and Supervisory Board Member

Shigeru Hatsumata

Director of NGK INSULATORS, LTD. Senior Executive Officer

2 Director

Akira Kato

3 Director

Noboru Okuda

4 Director

Kenji Yamaguchi

6 Outside Director

11 Outside Auditor

Motofumi Matsumura

Kimihiko Uemura

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

Partner of Midosuji Legal Profession Corporation

7 Outside Director

President & Chief Executive Officer

Vice President and Executive Officer

Senior Executive Officer

Senior Executive Officer

Executive Officer

Executive Officer

Executive Officer

Executive Officer

Operation execution control

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

Executive General
Manager, Plant
Engineering Division
Responsible for ProductCenterResponsible for Quality
Assurance Office

Executive General Manager,
Service Solution Division
President andRepresentative Director,
METAWATER TECH Co., Ltd.

Executive General
Manager, Public Private
Partnership Division

President andRepresentative Director,
METAWATER SERVICE
Co., Ltd.

Executive General
Manager, Business
Strategy Division
Responsible for WBC
Center

Deputy Executive General
Manager, Corporate Strategy
Planning Division
Executive General Manager,
HR & General Affairs Planning
Office, Corporate Strategy
Planning Division
Responsible for CSR Promotion
Office, Corporate Strategy
Planning Division
Responsible for Risk Management

Executive Officer

Executive Officer

Executive Officer

Executive Officer

Executive Officer

Executive Officer

Executive Officer

Executive General
Manager, Sales andMarketing Division

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

Deputy Executive General Manager,
International Business Division
Director and Deputy President,
METAWATER USA, INC.
Chairman of the Board, AquaAerobic Systems, Inc.

Executive General Manager,
Plant Construction Center

Deputy Executive General
Manager, Sales &Marketing Division

Executive General Manager,
Procurement Center
Responsible for Safety and
Health Management Office

Executive General
Manager, International
Business Division
Director and President,
METAWATER USA, INC.

Yasushi Nakamura Akira Kato

12 Outside Auditor

Keiichiro Sue

Kazuo Takimoto

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

CPA and Tax Accountant ofTokyo Kudan Accounting OfficeNoboru Okuda

Makoto Shimizu Masashi Sakai

Eiji Nakamura

Kenji Yamaguchi

Michio Fujii

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.

Masahiro Takagi Masayuki Nakagawa Yoshito Ezure

Responsible for Information
Technology Planning Department,
Corporate Strategy Planning Division

57

METAWATER REPORT 2019

Tsugio Kusano

Susumu Kadowaki Koichi Yamaguchi Ken Akikawa

METAWATER REPORT 201958

G

GovernanceRisk Management

Initiatives for strengthening 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 occurrenceor 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 andreinforce the corporate framework so that the Group can appropriately address individual risks in order to meet stakeholders’expectations.

Board of Directors Meeting

Supervision

Management Meeting

ReportInstruction
Supervision

Reportefficiency and convenience, etc. However, the development of an information society is increasing, and with it information security risks are
increasing as well, such as leakage of confidential or personal information, cyber-attacks, etc. As such, the METAWATER Group is making various
efforts to combat information security risks.

Upgrading security countermeasures at construction andplant operation sites
In addition to strengthening information security in offices, the METAWATER Group is also
taking measures to strengthen information security at construction sites and operation andmaintenance sites for water and sewage treatment plants. At the same time, we conduct ITinternal audits to identify issues and implement countermeasures. Opportunities for minor
improvements were identified in FY2018 audits, and all of those issues were corrected, with
continuous improvements being made.
Information security is imperative at construction sites

ReportRisk Management Sub-Committee
Instruction

Auditing Office

Audit

ReportDivisions/Group companies

Information security training for all employees
Collective education and e-learning training is being carried out for all employees to improvetheir information security knowledge. For new employees in particular, all group companies
are holding individual workshops. Easy-to-understand examples are used to raise awarenessand strengthen information security.

Besides, to further address individual risks, we have stipulated “Group Emergency Procedures,” “Compliance Rules,” “Information

METAWATER’S ESGCSR Committee

The utilization of Information and Communications Technology (ICT) is indispensable for promoting work style reforms, improving operational

Information security seminar for new graduates

Security Policies,” rules and standards to address accidents and environment/safety and hygiene issues, manuals, and so forth. As aresult, we have established a system that enables prompt and appropriate responses to be taken in the event of various contingencies.

Compliance
We believe that ensuring proper compliance and being widely trusted by society leads to sustainable growth of the METAWATER Group, as

BCM activities

well as fosters a healthy corporate culture. Based on this understanding, we have established Compliance Rules that serve as guidelines for the
Corporate Charter of Conduct, the Employees' Code of Conduct, and the compliance issues that the Group could implement and realize. In orderWith a commitment to strengthening Business Continuation Management (BCM),

to link these to specific action, various internal regulations have been established, ensuring thorough compliance with laws and internal rules.

the METAWATER Group has developed the Business Continuation Plan (BCP),
which is suitable for its business characteristics.
Furthermore, the Group regularly holds BCM Promotion Working Group meetingsin order to improve the effectiveness of the formulated BCP.
In FY2018, we held company-wide emergency response headquarters trainingthat included the participation of all directors as well as the President. For
this training, we assumed that a large-scale earthquake occurred and worked
primarily on the initial response to be taken immediately following the disaster.

BCM Promotion Working GroupWe also held a safety confirmation system briefing for executives, as well as
skill training for the Self-defense Fire-fighting Team organized by employees atCompliance Working Group

Compliance Education

As a specialized working group under the CSR Committee, we haveestablished the Compliance Working Group, which is comprised of fivechief department managers and the Legal Division as the secretariat.
They are engaged in activities that include checking on and improving
implementation of compliance programs, studying and developing
company-wide compliance education and measures, and offering
consultation on issues received from the compliance helpline. In responseto these matters, we hold emergency and temporary meetings in addition
to regular quarterly meetings.

The METAWATER Group provides lecture-based courses, including
company-wide education provided at main bases throughout the country,
company-wide e-learning, executive education, and education by rank.
From FY2018 to FY2019, we have been holding company-wide education
based on the themes of protecting personal information, information
security, and harassment prevention.
In FY2018, 31 meetings were held at eight bases, with 1,652 employees
participating in the courses.

■ FY2018 - FY2019 actual and planned
implementation of company-wide education

the head office and Hino office. They acquired various technical skills related tomaking emergency reports, performing cardiopulmonary resuscitation, using fire
extinguishers, etc.
Initial response at the office in the event of an emergency will also improve theeffectiveness of the BCP, and the Self-defense Fire-fighting Team training will berolled out nationwide.

59

METAWATER REPORT 2019

Company-wide emergency response headquarters training

FY2018(Actual)Head office (14 times), Hino (4), Sapporo (2), Sendai (3),Nagoya (3), Osaka (3), Chiba (1), Omiya (1)FY2019(Planned)

Head office (5 times), Hino (4), Fukuoka (2),Nagoya (3), Osaka (3)METAWATER REPORT 201960

Disclosure policies
1

Basic policy

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

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 partof that requested by the laws and regulations, we disclose
it through the news media or corporate websites etc. inconsideration of its importance and urgency.
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
to inquiries etc.
In addition, the opinions given by stakeholders through thesaid communication will be shared within our Group and usedin future as part of reference data.

61

5

METAWATER REPORT 2019

Improvement of the internal systemcompany rules.

Financial
FinancialInformation
Information
63
63

Financial Highlights
財務報告

65
65

Consolidated Balance Sheets
連結貸借対照表

67
67

Consolidated Statement of Income and Statement of Comprehensive Income
連結損益計算書及び連結包括利益計算書

69
69

Consolidated Statement of Changes in Shareholders’Equity
連結株主資本等変動計算書

71
72

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

73
74

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

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, 2019.
Operating Results Review for the Current Fiscal Year
During the fiscal year ended March 31, 2019, 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 uncertainty about the
future such as Chinese economic slowdown and concern about trade conflict between the US and China, economic situation
generally remains steady.
Under such circumstances, in light of environment surrounding our business and development of the Group, the Group haschanged the corporate philosophy and established the Midterm Business Plan 2020 (from the fiscal year ended March 31,
2019 to fiscal year ending March 31, 2021), as a good refresh of the 10th anniversary of the Group foundation. In order toachieve the Plan, the Group tries our best to implement the priority measures: i) strategic development investment, ii)
business strategy (enhancement of foundation field and expansion of growth field) and iii) efforts of sustainable ESG.
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.
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, 2019, net sales was ¥117,342 million (5.8%
increase year to year), operating income was ¥7,607 million (12.8% increase year to year), ordinary income was ¥7,624
million (17.9% increase year to year) and profit attributable to owners of parent was ¥5,170 million (31.5% increase year toyear). Sales orders for the fiscal year ended March 31, 2019 was ¥123,807 million (5.9% decrease year to year), of which¥142,347 million (4.8% increase year to year) was outstanding as of March 31, 2019.
The Group’s business consists of two segments: Plant Engineering Business Segment including EPC as foundation field andforeign business as growth field and Service Solutions Business Segment including O&M as foundation field and PPP as
growth field.

(Plant Engineering Business)
For the Plant Engineering Business, net sales amounted to ¥65,517 million (0.9% increase year to year) and operating
income amounted to ¥3,191 million (21.6% increase year to year), due to a steady growth in EPC and foreign businesses.
Outstanding order was ¥73,915 million (5.7% increase year to year).
(Service Solutions Business)
For the Service Solutions Business, net sales amounted to ¥51,824 million (12.8% increase year to year) due to a steady
growth in O&M and PPP businesses. Operating income amounted to ¥4,416 million (7.1% increase year to year).
Outstanding order was ¥49,892 million (19.1% decrease year to year).

Net sales(Millions of yen)

Plant Engineering Business
Service Solutions Business

1,200

650

655

(Cash flows from investing activities)
The funds used for investing activities was ¥805 million (¥62 million decrease year to year): ¥555 million used for purchaseof property, plant and equipment and ¥114 million used for purchase of intangible assets.
(Cash flows from financing activities)
The funds used for financing activities was ¥2,617 million (¥1 million decrease year to year): ¥1,555 million used for payment
of dividends and ¥833 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, which are aging, as well as natural disasters such as large earthquakes and torrential
rains are urgent issues. Under these circumstances, new government policies including revisions of the PFI Act and theWater Supply Act (promulgated in December 2018) are encouraging public-private partnerships using private funds,
technology and know-how in public infrastructure development as well as studies of expanded coverage areas as measures
to strengthen the management of water and sewage business operators. In addition, the creation of new business
opportunities and business models backed by technological innovations such as IoT, AI and 5G is expected in the future.
On the other hand, overseas water and sewage market, mainly in Europe and the United States, are faced with needs forcountermeasures against aging facilities and equipment and the tightening of environmental regulations. While in areas
including emerging Asian countries, demand is growing for the development of a water and sewage infrastructure in
conjunction with the increasing population and demand for water. Going forward, the emergence of business opportunities inline with these issues and needs of the water and sewage market of each country is expected to continue.
In light of this business environment, the Group has developed the Midterm business plan 2020, covering the period up to
FY2020 (fiscal year ending March 31, 2021), as the first stage in achieving its long-term vision (ten-year-vision). The entire
Company is working 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.

60

26

32

40
30

400

459

518

20

41

44

2018.32019.310
002018.363

Service Solutions Business

80

50

600

200

Plant Engineering Business(Cash flows from operating activities)
The funds generated by operating activities was ¥6,236 million (¥1,061 million increase year to year): ¥7,624 million ofincome before income taxes, ¥5,361 million increase in advances received and ¥1,348 million of depreciation, offsetting with
¥4,165 million increase in notes and accounts receivable - trade and ¥2,165 million used for payment of income taxes.

70

1,000
800

Operating income(Millions of yen)

Cash Flow Review
The balance of cash and cash equivalents (hereinafter the “funds”) as of March 31, 2019 increased by ¥2,819 million
compared to March 31, 2018 to ¥27,796 million. An analysis of the cash flows for the fiscal year ended March 31, 2019 andrelated commentary thereon is presented below:

Financial Information

Operating results by segment are as follows:

Financial Position Review for the Current Fiscal Year
Total assets as of March 31, 2019 increased by ¥9,668 million compared to March 31, 2018 to ¥132,620 million.
Current assets increased by ¥10,137 million compared to March 31, 2018 to ¥115,538 million due to an increase in cash anddeposits and notes and accounts receivable - trade. Non-current assets decreased by ¥468 million compared to March 31,2018 to ¥17,082 million due to a decrease in goodwill and customer-related assets.
Current liabilities increased by ¥7,399 million compared to March 31, 2018 to ¥56,326 million due to an increase in advances
received, offsetting with a decrease in accounts payable - trade. Non-current liabilities decreased by ¥1,720 million comparedto March 31, 2018 to ¥17,262 million due to a decrease in PFI and other project finance loans.
Total net assets increased by ¥3,988 million compared to March 31, 2018 to ¥59,031 million due to recognition of profit
attributable to owners of parent and payment of dividends.

METAWATER REPORT 20192019.3METAWATER REPORT 201964

Consolidated Balance Sheets

Thousands of
U.S. dollars

Millions of yen
As of March 31,
2018

As of March 31,
2019

As of March 31,
2019

Assets

As of March 31,
2018

As of March 31,
2019

As of March 31,
2019

Liabilities

Current assets

Current liabilities

Cash and deposits*325,805*3, *428,589257,581

Accounts payable - trade

18,372

18,278

164,681

Notes and accounts receivable - trade*3

72,164*3

76,282687,287

Electronically recorded obligations

8,155

8,380

75,502

269

337

3,036

844

7,604

Work in process

2,623

4,670

42,075

Short-term loans payable

Supplies

3,299

3,932

35,426

Current portion of PFI and other projects finance loans

2,062

18,578

Income taxes payable

2,173

2,419

21,794

115,538

1,040,976

Advances received

10,71916,075

144,832

Provision for warranties for completed construction

857

1,361

12,262

Provision for loss on construction contracts

204

517

4,658

1,508

Other current assets*4

Total current assets

105,401*4

Non-current assets
Property, plant and equipment

*3

833

*3

Buildings and structures, net

1,189

1,300

11,712Other current liabilities

7,340

8,111

73,078

Machinery and equipment, net

818

970

8,739

Total current liabilities

48,92756,326

507,487

Tools, furniture and fixtures, net

423

462

4,162

Construction in progress

235

153

1,378

Long-term loans payable

2,050

1,847

16,641Other property, plant and equipment, net

315

301

2,711

PFI and other projects finance loans

10,70596,4503,188

28,723Liability for retirement benefit

5,294

4,603

41,472Other non-current liabilities

88

107

964

Total non-current liabilities

18,982

17,262

155,527

67,91073,589663,023

Total property, plant and equipment

*2

2,982

*2

Intangible assets

Non-current liabilities*3

11,549

*3

890

517

4,658

Software in progress

94

29

261

Goodwill

1,842

1,670

15,046

Customer-related assets

2,769

2,539

22,875

Shareholders’ equity

Other intangible assets

1,463

1,314

11,838

Capital stock

11,946

11,946

107,631

Total intangible assets

7,060

6,072

54,707

Capital surplus

15,08015,080135,868

Retained earnings

30,21433,830304,802

(0)

(0)

(0)

57,24160,856548,301

Investment securities*1, *4

1,345
224*1, *4

Total liabilities
Net assets

1,342

12,091

Treasury stock

196

1,765

Total shareholders’ equity

Long-term loans receivable*4

Guarantee deposits

1,528

1,604

14,451

Assets for retirement benefits

821

1,374

12,379Valuation difference on available-for-sale securities

54

49

441

Deferred tax assets - non-current

3,541

3,268

29,444Foreign currency translation adjustment

84

(371)

(3,342)

47

35

315

Remeasurements of defined benefit plans(2,474)(1,645)(14,821)

7,509

7,822

70,474

Total accumulated other comprehensive income(2,335)(1,967)(17,722)

17,551

17,082

153,905

136

142

1,279

122,952

132,620

1,194,882

55,04259,031

531,858

122,952

132,620

1,194,882

Other non-current assets
Total investments and other assets
Total non-current assets
Total assets*4

Accumulated other comprehensive income

Non-controlling interests
Total net assets
Total liabilities and net assets

METAWATER REPORT 2019

Financial Information

SoftwareInvestments and other assets

65

Thousands of
U.S. dollars

Millions of yen

METAWATER REPORT 201966

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, 2018
Net sales
Cost of sales

110,895*1

Gross profit
Selling, general and administrative expenses
Operating income

Fiscal year ended
March 31, 201986,925*1

23,970*2, *4

17,224
6,745*2, *4

Thousands of
U.S. dollars

Millions of yen

Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 2019

3,951

5,178

46,652

117,342

1,057,230

Net income

91,442

823,876

Other comprehensive income

25,899233,345

Valuation difference on available-for-sale securities

21

(4)

(36)

18,291

164,798

Foreign currency translation adjustment

(49)

(455)

(4,099)7,607

68,537

Remeasurements of defined benefit plans

364

828

7,460

367

3,306

4,287

5,545

49,959

4,267

5,538

49,89620

763

Non-operating income:

Total other comprehensive income

Interest income

193

194

1,747

Dividends income

34

56

504

Foreign exchange gain

—

152

1,369

Miscellaneous income

17

7

63

Total non-operating income

245

410

3,694

Interest expenses

217

218

1,964

Loss on valuation of investment securities

—

87

783

84

756

Comprehensive income

*1

336

*1

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

Non-operating expenses:

66*3

Foreign exchange loss

236

—

—

Miscellaneous loss

4

3

27

526

394

3,549

Ordinary income

6,465

7,624

68,690

Income before income taxes

6,465

7,624

68,690

Income taxes - current

2,187

2,526

22,758

Income taxes - deferred

325

(80)

(720)

Total income taxes

2,513

2,446

22,038Net income

3,951

5,178

46,652

20

7

63

3,931

5,170

46,580Total non-operating expenses

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

67*3

METAWATER REPORT 2019

Financial Information

Loss on disposal of non-current assets

METAWATER REPORT 201968

Consolidated Statement of Changes in Shareholders’ Equity

Fiscal year ended March 31, 2018

Fiscal year ended March 31, 2019
(Millions of yen)

(Millions of yen)

Shareholders’ equity

Balance at April 1, 2017

Shareholders’ equity

Capital stock

CapitalsurplusRetainedearnings

Treasurystock

11,94615,08027,787(0)

Total
shareholders’equity54,814

Balance at April 1, 2018

Changes during the year

Capital stock

CapitalsurplusRetainedearnings

Treasurystock

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

Changes during the year

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

Dividends from surplus(1,555)(1,555)

Profit attributable to ownersof parent

3,931

3,931

Profit attributable to ownersof parent

5,170

5,170

(0)

Purchase of treasury stock

Purchase of treasury stock(0)

Changes in other equity, net
Total changes during the year
Balance at March 31, 2018

—

—

2,427

(0)

2,427

Total changes during the year

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

Balance at March 31, 2019

(0)

—

—

3,615

(0)

3,614

11,94615,08033,830(0)60,856

Accumulated other comprehensive income

Total
Valuation
Foreign currency Remeasurements accumulateddifference onof definedothertranslation
available-for-salebenefit planscomprehensive
adjustment
securities
income32

133(2,838)(2,671)

Noncontrollinginterests

Total net
assets117

52,260Changes during the year

Total
Valuation
Foreign currency Remeasurements accumulateddifference onof definedothertranslation
available-for-salebenefit planscomprehensive
adjustment
securities
incomeBalance at April 1, 2018

54

84

(2,474)(2,335)

Noncontrollinginterests

Total net
assets136

55,042

Changes during the year

Dividends from surplus(1,503)

Dividends from surplus(1,555)

Profit attributable to ownersof parent

3,931

Profit attributable to ownersof parent

5,170

Purchase of treasury stock(0)

Purchase of treasury stock(0)

Changes in other equity, net

21

(49)

364

336

18

354

Changes in other equity, net

(4)

(455)

828

367

5

373

Total changes during the year

21

(49)

364

336

18

2,782

Total changes during the year

(4)

(455)

828

367

5

3,988

Balance at March 31, 2018

54

84

(2,474)(2,335)

136

55,042

Balance at March 31, 2019

49

(371)

(1,645)(1,967)

142

59,031METAWATER REPORT 2019

METAWATER REPORT 2019

Financial Information

Balance at April 1, 2017

(0)Changes in other equity, net

Accumulated other comprehensive income

69

Total
shareholders’equity70

Consolidated Statement of Cash Flows

Fiscal year ended
March 31, 2018

Shareholders’ equity

Balance at April 1, 2018

Capital stock

CapitalsurplusRetainedearnings

Treasurystock

107,631

135,868

272,222(0)515,731

Changes during the year
(14,010)(14,010)

Profit attributable to ownersof parent

46,58046,580Purchase of treasury stock(0)

Balance at March 31, 2019

68,690Depreciation

1,441

1,348

12,145

Amortization of goodwill

140

138

1,243

Increase/(decrease) in liabilities for retirement benefits

(349)

(156)

(1,405)(Increase)/decrease in assets for retirement benefits

68

(550)

(4,955)

(194)

510

4,595

37

313

2,820

Interest income and dividends income

(228)

(250)

(2,252)(0)32,561

Interest expenses

217

218

1,964

107,631

135,868

304,802(0)548,301

Foreign exchange (gain)/loss

209

(174)

(1,567)

Loss on disposal of property, plant and equipment

66

84

756

Loss/(gain) on valuation of investment securities

—

87

783

(Increase)/decrease in notes and accounts receivable(4,311)(4,165)(37,525)(Increase)/decrease in inventory

1,292(2,707)(24,389)

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

(858)

248

2,234

Increase/(decrease) in advances received

2,067

5,361

48,301Other cash flows from operating activities

1,496

441

3,973

Subtotal

7,562

8,372

75,430Interest and dividends income received

228

250

2,252

Interest expenses paid

(220)

(220)

(1,982)

Income taxes paid

(2,394)(2,165)(19,506)

Cash flows from operating activities

5,175

6,236

56,185

Net (increase)/decrease in time deposits

50

34

306

Purchase of property, plant and equipment

(527)

(555)

(5,000)Purchase of intangible assets

(217)

(114)

(1,027)Purchase of investment securities

(110)

(95)

(855)

Payments of loans receivable

(1)

—

—

Collection of loans receivable

28

27

243

Other cash flows from investing activities

(91)

(103)

(928)

Net cash used in investing activities

(868)

(805)

(7,252)486

756(22,290)(21,037)

Noncontrollinginterests

1,225

Total net
assets495,918

Dividends from surplus(14,010)

Profit attributable to ownersof parent

46,580Purchase of treasury stock(0)

Changes in other equity, net(36)(4,099)

7,460

3,306

45

3,360

Total changes during the year(36)

(4,099)

7,460

3,306

45

35,931

Balance at March 31, 2019441

(3,342)(14,821)(17,722)

1,279

531,858

Financial Information

32,570Changes during the year

METAWATER REPORT 2019

7,624

—

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

71

6,465

—

Accumulated other comprehensive income

Balance at April 1, 2018

Fiscal year ended
March 31, 2019

Income before income taxes

Increase/(decrease) in provision for warranties for completed
construction
Increase/(decrease) in provision for loss on
construction contracts(0)

Changes in other equity, net
Total changes during the year

Fiscal year ended
March 31, 2019

Cash flows from operating activities

Total
shareholders’equityDividends from surplus

Thousands of
U.S. dollars

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

Cash flows from investing activities

METAWATER REPORT 201972

[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, 2018

Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 2019

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

55

495

Repayments of short-term loans payable

(740)

(282)

(2,540)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

(825)

(833)

(7,505)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)(1,555)(14,010)

(1)

(1)

(9)

(2,619)(2,617)(23,578)

(63)

4

36

Net increase/(decrease) in cash and cash equivalents

1,625

2,819

25,398by the Company.

Cash and cash equivalents at April 1

23,352

24,977225,038

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

27,796

250,436

Purchase of treasury stock
Cash dividends paid
Cash dividends paid to non-controlling interests
Cash flows from financing activities
Effect of exchange rate change on cash and cash
equivalents

Cash and cash equivalents at March 31*1

24,977*1(Presentation of Amounts in the Consolidated Financial Statements)

are included solely for convenience. The rate of ¥110.99 to US$1.00, prevailing on March 31, 2019, 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.

(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, 2019, the numbers of consolidated subsidiaries were 9 (9 in 2018). 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(Summary of Significant Accounting Policies)
1. Valuation standard and methods for significant assets(1) Securities

Financial Informationtransactions from January 1 to March 31. All significant intercompany balances and transactions have been eliminated in consolidation.

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
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.

73

METAWATER REPORT 2019

METAWATER REPORT 201974

(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

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

on 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

Allowances for ordinary debt are computed based on the historical rate of default. For certain debts, such as those where recovery is(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

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, 2019.

(2) Provision for warranties for completed construction

8.

The amortization method and amortization period of goodwill

Financial Information

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.

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
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.

75

METAWATER REPORT 2019

METAWATER REPORT 201976

(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, 2018
(Millions of yen)

As of March 31, 2019
(Millions of yen)

As of March 31, 2019
(Thousands of U.S. dollars)

1,020

1,020

9,190

As of March 31, 2018
(Millions of yen)

As of March 31, 2019
(Millions of yen)

As of March 31, 2019
(Thousands of U.S. dollars)

3,491

3,827

34,480Investment 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, 2018
(Millions of yen)

As of March 31, 2019
(Millions of yen)

As of March 31, 2019
(Thousands of U.S. dollars)(Changes in Presentation Methods)

Cash and deposits

1,534

1,599

14,406(Changes due to the application of “Partial Amendments to Accounting Standard for Tax Effect Accounting”)

Notes and accounts receivable - trade

13,63013,393

120,668

15,164

14,993135,084

As of March 31, 2018
(Millions of yen)

As of March 31, 2019
(Millions of yen)

As of March 31, 2019
(Thousands of U.S. dollars)

Investments in subsidiaries

152

152

1,369

Long-term loans receivable

524

487

4,387

Total

676

639

5,757

Total

The Company has applied “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No. 28, February 16, 2018;
hereinafter the “Partial Amendments to Tax Effect Accounting Standard”) from the beginning of the fiscal year ended March 31, 2019. Accordingly,
deferred tax assets are presented under investments and other assets, deferred tax liabilities are presented under non-current liabilities, and changes

The following assets eliminated in the consolidation procedures are pledged as security.

have been made to the notes to income taxes.
As a result, in the consolidated balance sheets for the fiscal year ended March 31, 2018, deferred tax assets - current of ¥1,492 million under current
assets and ¥39 million of the ¥115 million of deferred tax liabilities included in other current liabilities under current liabilities have been reclassified andliabilities included in other current liabilities under current liabilities have been reclassified and included in ¥88 million of other non-current liabilities under
non-current liabilities.
In addition, the notes to income taxes have been changed to include the details stated in Note 8 (excluding the total amount of valuation allowance) andNote 9 of “Accounting Standard for Tax Effect Accounting” as set forth in Paragraphs 3 through 5 of the Partial Amendments to Tax Effect Accounting*4.

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, 2018
(Millions of yen)

As of March 31, 2019
(Millions of yen)

As of March 31, 2019
(Thousands of U.S. dollars)

Investment securities

405

408

3,676

Long-term loans receivable

211

195

1,756

Total

617

603

5,432

Standard. However, among such details, those relating to the fiscal year ended March 31, 2018 have been omitted, in accordance with transitional
provisions as set forth in Paragraph 7 of the Partial Amendments to Tax Effect Accounting Standard.

77

METAWATER REPORT 2019

METAWATER REPORT 2019

Financial Information

included in ¥3,541 million of deferred tax assets - non-current under investments and other assets, and ¥76 million of the ¥115 million of deferred tax

78

*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, 2018
(Millions of yen)

As of March 31, 2019
(Millions of yen)

As of March 31, 2019
(Thousands of U.S. dollars)

161

144

1,297

Osaka Bioenergy Co., Ltd.

(2) Performance guarantee
As of March 31, 2018
(Millions of yen)

As of March 31, 2019
(Millions of yen)

As of March 31, 2019
(Thousands of U.S. dollars)

Ariake Water Management Co., Ltd.

25

27

243

Aizuwakamatsu Aqua Partner Co., Ltd.

583

542

4,883

Sasebo Aqua Solution Co., Ltd.

255

242

2,180

Sorami Bio Partners Co., Ltd.

63

63

567

Northern Akita Eco-resource Management Co.,
Ltd.

17

17

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

30

(7)

Reclassification adjustments

—

—

—

Amount before tax effect

30

(7)

(63)

Tax effect

(9)

3

27

Valuation difference on available-forsale securities

21

(4)

(36)

(49)

(455)

(4,099)Amount recognized during the year
Amount recognized during the year

(171)

533

4,802

Reclassification adjustments

695

659

5,937

Before tax effect adjustment

524

1,193

10,748Tax effects

(160)

(365)

(3,288)

364

828

7,460

336

367

3,306

—

13

117

Gotemba Oyama Eco Partners Co., Ltd.

—

14

126

946

922

8,307

Remeasurements of defined benefit
plans
Total other comprehensive
incomeProvision for loss on construction contracts included in cost of sales are as follows:
Fiscal year ended March 31, 2018
(Millions of yen)

Fiscal year ended March 31, 2019
(Millions of yen)

Fiscal year ended March 31, 2019
(Thousands of U.S. dollars)

63

363

3,270

(Notes to Consolidated Statement of Changes in Shareholders’ Equity)
Fiscal year ended March 31, 2018
1. Shares issued

*4.

79

The major items and their amounts of selling, general and administrative expenses are as follows:
Fiscal year ended
March 31, 2018
(Millions of yen)

Fiscal year ended
March 31, 2019
(Millions of yen)

Fiscal year ended
March 31, 2019
(Thousands of U.S. dollars)

Salaries and allowances

4,066

4,050

36,489Bonuses

1,540

1,466

13,208Retirement benefit expenses

525

501

4,513

Provision for warranties
for completed construction

(243)

446

4,018

Research and development expenses

1,706

1,908

17,190

Increase

Decrease

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

25,923,500

Number of shares
as of April 1, 2017

Increase

Decrease

Number of shares
as of March 31, 2018

44

47

—

91

2. Treasury stock
Type of shares
Common stock(shares)(Details of the changes)
Increase resulting from purchase of shares less than one unit: 47 shares
3. Dividends(1) Dividends paid

The details of loss on disposal of non-current assets are as follows:
Fiscal year ended March 31, 2018

Fiscal year ended March 31, 2019

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, 2018
(Millions of yen)

Fiscal year ended March 31, 2019
(Millions of yen)

Fiscal year ended March 31, 2019
(Thousands of U.S. dollars)

1,706

1,908

17,190METAWATER REPORT 2019

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

Financial Information

*3.

(63)

Foreign currency translation adjustment

Type of shares*2.

Fiscal year ended
March 31, 2019
(Thousands of U.S.
dollars)

Fiscal year ended
March 31, 2019
(Millions of yen)

153

(Notes to Consolidated Statement of Income)*1.

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

Remeasurements of defined benefit plans

Ofunato Sewer Management Co., Ltd.

Total

The following table presents reclassification adjustments and tax effects allocated to each component of other comprehensive income for theyears ended March 31, 2019 and 2018

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
23, 2017

Common stock

751

29.00

March 31, 2017

June 8, 2017

Board of Directors’
meeting held on
November 14, 2017

Common stock

751

29.00

September 30, 2017

December 4, 2017

(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

METAWATER REPORT 201980

Fiscal year ended March 31, 2019

(Financial Instruments)

1. Shares issued

1. Overview

Type of shares
Common stock(shares)Number of shares
as of April 1, 2018

Increase

Decrease

Number of shares
as of March 31, 201925,923,500——

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, 2018

Increase

Decrease

Number of shares
as of March 31, 2019

91

59

—

150

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: 59 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

Total amount ofdividends(Millions of yen)

Dividend per share(Yen)

Cut-off date

751

29.00

March 31, 2018

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.

Board of Directors’
meeting held on May
23, 2018

Common stock

Board of Directors’
meeting held on
November 13, 2018

Common stock

803

Resolution

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, 2018

Common stock

6,766

0.26

March 31, 2018

June 7, 2018

Board of Directors’
meeting held on
November 13, 2018

Common stock

June 7, 2018

Loans payable are mainly used for the acquisition of shares of subsidiaries, with the maximum maturity period of 7 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

31.00

September 30, 2018

December 4, 2018

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 andpayables, 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, 2019 and 2018 and estimated fair value are shown

0.27

September 30, 2018

December 4, 2018

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).

(2) Dividends whose record date falls in the fiscal year ended March 31, 2019, 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 22,
2019

Commonstock

Retainedearnings

803

31.00

March 31, 2019

June 6, 2019

Resolution

Type ofshares

Source ofdividends

Cut-off date

Effective date

Board of Directors’
meeting held on May 22,
2019

Commonstock

Retainedearnings

March 31, 2019

June 6, 2019

Total amount ofdividends
Dividend per share(Thousands of U.S.
(U.S. dollars)
dollars)
7,234

0.27

Financial Information

7,234(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

81

METAWATER REPORT 2019

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

Fiscal year ended
March 31, 2019
(Millions of yen)

Fiscal year ended
March 31, 2019
(Thousands of U.S.
dollars)

25,80528,589257,581

(827)

(792)

(7,135)24,977

27,796

250,436METAWATER REPORT 201982

As of March 31, 2018

(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

25,80525,805—(2) Notes and accounts receivable - trade72,16472,061(103)(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

111

111

—

98,08197,978(103)(1) Accounts payable - trade

18,372

18,372—(2) Electronically recorded obligations

8,155

8,155

—

(3) Short-term loans payable

269

269

—

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

833

833

—

(5) Long-term loans payable

2,050

2,053

2

(6) PFI and other projects finance loans

11,54911,819270

Total assets(7) Derivatives
Total liabilities(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

41,23041,503272(1)

Accounts payable - trade, (2) Electronically recorded obligations, (3) Short-term loans payable and (4) Current portion of PFI and other project
finance loans

As of March 31, 2019

The fair value of accounts payable - trade, electronically recorded obligations, short-term loans payable and current portion of PFI and otherproject finance loans is based on their carrying amounts, since the fair value approximates their carrying amounts due to the short maturity
Carrying value(Millions of yen)

Fair value(Millions of yen)

Difference(Millions of yen)

(1) Cash and deposits

28,58928,589—(2) Notes and accounts receivable - trade76,282

76,332

49

103

103

—

period of the instruments.

(5)(3) Investment securities
Available-for-sale securities

104,976

105,025

49(1) Accounts payable - trade

Total assets

18,27818,278—(2) Electronically recorded obligations

8,380

8,380

—

337

337

—

844

844

—

1,847

1,840

(6)

(6) PFI and other projects finance loans

10,705

10,974

269

—

—

—

40,39240,655262

Carrying value(Thousands of U.S.
dollars)

Fair value(Thousands of U.S.
dollars)

Difference(Thousands of U.S.
dollars)(7) Derivatives
Total liabilities(1) Cash and deposits

257,581257,581—(2) Notes and accounts receivable - trade687,287

687,737441(3) Investment securities
Available-for-sale securities

928

928

—

945,814946,256441(1) Accounts payable - trade164,681

164,681—

Total assets(2) Electronically recorded obligations

75,50275,502—(3) Short-term loans payable(4) Current portion of PFI and other projects
finance loans(5) Long-term loans payable

3,036

3,036

—

7,604

7,604

—

16,641

16,578(54)(6) PFI and other projects finance loans

96,45098,873

2,423

—

—

—

363,924

366,2942,360(7) Derivatives
Total liabilities

83

METAWATER REPORT 2019

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 that

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

Long-term loans payable and (6) PFI and other project finance loans

are 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, 2018
(Millions of yen)

As of March 31, 2019
(Millions of yen)

As of March 31, 2019
(Thousands of U.S.
dollars)

1,233

1,238

11,154Since 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 includedin “(3) Investment securities”.

METAWATER REPORT 201984

(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, 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)

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

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

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

Due after fifteen
years(Millions of yen)

Total
As of March 31, 2019
As of March 31, 2019
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

28,589———Notes and accounts receivable - trade

62,894

4,892

3,971

4,524

91,483

4,892

3,971

4,524

Total

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

337

1,292

554

—

—

PFI and other projects finance loans

844

3,477

3,694

3,532

—

1,181

4,769

4,249

3,532

—

Total
Due in one year or Due after one year Due after five years
Due after ten years
through five years through ten years
less(Thousands of U.S.
(Thousands of U.S. (Thousands of U.S. (Thousands of U.S.
dollars)
dollars)
dollars)
dollars)
257,581———

Notes and accounts receivable - trade566,663

44,07635,77740,760824,245

44,07635,77740,760Total

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

3,036

11,640

4,991

—

—

PFI and other projects finance loans

7,604

31,32733,282

31,822—

10,64042,96738,282

31,822

—

Total

85

METAWATER REPORT 2019

METAWATER REPORT 2019

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)86

(Securities)(Derivatives)

Available-for-sale securities

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

As 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:
StocksTotal

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

111

33

78

111

33

78

As of March 31, 2018
Hedge accounting
methodAs of March 31, 2019
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

103

33

70

103

33

70

Carrying value(Thousands of U.S. dollars)

Acquisition cost(Thousands of U.S. dollars)

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

928

297

630

928

297

630

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

Short-cut method
for interest rate
swaps

Contract amount(Millions of yen)Contract 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

11,503

Type of derivativetransaction

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

(Note)

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, 2019

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

Fair value(Millions of yen)

Long-term loans
payable971

832(Note)

PFI and otherprojects financeloans

10,5719,806(Note)

11,543

10,638Contract 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

8,748

7,496

(Note)

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

PFI and otherprojects financeloans

95,24288,350(Note)

104,000

95,846

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.

87

METAWATER REPORT 2019

METAWATER REPORT 201988

(4) The components of retirement benefit expenses are as follows:(Retirement Benefits)
1.

Overview of retirement benefit plans
Fiscal year ended
March 31, 2018
(Millions of yen)

Fiscal year ended
March 31, 2019
(Millions of yen)

Fiscal year ended
March 31, 2019
(Thousands of U.S.
dollars)

Service cost

730

736

6,631

Interest cost

151

154

1,387

certain domestic consolidated subsidiary has a retirement benefit plan under which such subsidiary pays additional retirement benefits to employees

Expected return on plan assets

(139)

(146)

(1,315)

who meet the prescribed requirements upon their retirement.

Amortization of actuarial gain or loss

668

648

5,838

Amortization of prior service cost

7

8

72

(33)

(43)

(387)

1,385

1,358

12,235The Company has lump-sum payment plans and a contract-type corporate pension plan as its defined benefit plan. In addition, the Company has adefined contribution pension plan. The Company has established a retirement benefit trust.
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,

In certain cases, the Group may also pay additional retirement benefits that are not subject to any actuarial calculations.

Other
2.

Defined benefit plans

Retirement benefit expenses(1) The changes in the retirement benefit obligation are as follows:

Retirement benefit obligation at the beginning of the year

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

Fiscal year ended
March 31, 2019
(Millions of yen)

Fiscal year ended
March 31, 2019
(Thousands of U.S.
dollars)
151,401

16,554

16,804Service cost

730

736

6,631

Interest cost

151

154

1,387

Actuarial gain and loss

95

117

1,054

Retirement benefits paid

(705)

(636)

(5,730)

Other
Retirement benefit obligation at the end of the year

(21)

(12)

(108)

16,804

17,163

154,635(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, 2018
(Millions of yen)
Prior service cost

(6)

7

8

72

516

1,184

10,667

Total

524

1,193

10,748The components of remeasurements of defined benefit plans included in accumulated other comprehensive income (before tax effect) are as
follows:

Fiscal year ended
March 31, 2019
(Thousands of U.S.
dollars)
111,100

Unrecognized prior service cost

As of March 31, 2019
(Thousands of U.S. dollars)

25

16

144

Unrecognized actuarial gain and loss

3,540

2,355

21,218

Total

3,565

2,372

21,371

11,96012,331

139

146

1,315

Actuarial gain and loss

(56)

653

5,883

Contribution by the companies

586

1,036

9,334

Retirement benefits paid

(317)

(267)

(2,405)

Stocks

37%

29%

387

Bonds

35

39

General accounts

22

20

Plan assets at fair value at the end of the year19
12,33143
13,935125,551

The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheets as of March 31,2018 and 2019 for the Company’s and the consolidated subsidiaries’ defined benefit plans:(7) The fair value of plan assets, by major category as a percentage of total plan assets are as follows:
As of March 31, 2018

As of March 31, 2019

Other

6

12

Total

100

100

(Note)

Financial Information

Fiscal year ended
March 31, 2019
(Millions of yen)

As of March 31, 2019
(Millions of yen)

Expected return on plan assets

Other

(3)

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

Fiscal year ended
March 31, 2019
(Thousands of U.S.
dollars)

Actuarial gain and loss

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

Plan assets at fair value at the beginning of the year

Fiscal year ended
March 31, 2019
(Millions of yen)

Retirement benefit trust established for the corporate pension plans is included and equivalent to 8.7% of total amount of plan assets as ofMarch 31, 2018 and 9.4% as of March 31, 2019.

As of March 31, 2018
(Millions of yen)

As of March 31, 2019
(Millions of yen)

As of March 31, 2019
(Thousands of U.S. dollars)

Funded retirement benefit obligation

14,426

14,761

132,993

Plan assets at fair value(12,331)(13,935)(125,551)

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.

2,094

826

7,442

Unfunded retirement benefit obligation

2,378

2,402

21,641

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

4,473

3,228

29,083Liability for retirement benefit

5,294

4,603

41,472Long-term expected rates of return on plan assets

Assets for retirement benefits

821

1,374

12,379

Expected rates of salary increase

4,473

3,228

29,083(8) The assumptions used in accounting for the defined benefit plans are as follows:
Fiscal year ended March 31,
2018
Discount rates

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

89

METAWATER REPORT 2019

0.5–1.2%

Fiscal year ended March 31,
2019
0.6–1.2%

Mainly 1.5

Mainly 1.5

1.2–8.5

1.2–8.5

METAWATER REPORT 2019

90

3.

Defined contribution plans

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

Contributions of defined contribution plans for the fiscal years ended March 31, 2018 and 2019 were ¥140 million and ¥142 million (US$1,279
thousand), respectively.

As of March 31, 2018

As of March 31, 2019

30.9%

30.6%

Effective statutory tax rate
(Adjustment)(Income Taxes)
1. The significant components of deferred tax assets and deferred tax liabilities

As of March 31, 2018
(Millions of yen)

As of March 31, 2019
(Millions of yen)

As of March 31, 2019
(Thousands of U.S.
dollars)

Deferred tax assets:

Permanently non-deductible items such as entertainment expenses

3.8

4.0

Permanently non-taxable items such as dividends income

(0.1)

(0.1)

Per capita inhabitants’ tax

1.0

0.9

Tax credit for experiment and research expenses

(2.1)

(3.0)

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

2.1—

Changes in valuation allowance

0.4

3.4

Enterprise tax payable

180

178

1,603

Difference in tax rates of overseas consolidated subsidiaries

0.0

(0.5)

Accrued bonuses

873

824

7,424

Other

2.9

(3.2)

Provision for loss on construction contracts

64

158

1,423

Effective income tax rate

38.9

32.1

Provision for warranties for completed
construction

209

367

3,306

Excess of depreciation

318

328

2,955

Liability for retirement benefit

2,154

1,849

16,659

Unused tax losses (Note 2)

148

187

1,684

Other

628

705

6,351

4,578

4,600

41,445

Valuation allowance for unused tax losses (Note 2)

—

(165)

(1,486)

Valuation allowance for the total amount of
deductible temporary differences

—

(257)

(2,315)

Valuation allowance subtotal (Note 1)

(168)

(422)

(3,802)

Total deferred tax assets

4,410

4,177

37,634Gain on contribution of securities toretirement benefit trust

(691)

(727)

(6,550)

Other

(254)

(282)

(2,540)Total deferred tax liabilities(945)(1,009)(9,090)Net deferred tax assets (liabilities)

3,465

3,168

28,543

Subtotal(Asset Retirement Obligations)
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.

(Segment Information)[Segment Information]

Deferred tax liabilities:

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 toperiodical review by the board of directors in determining how to allocate operating resources and evaluating performance.

comprehensive domestic and overseas strategies developed for its products and services.
Therefore, the Group basically consists of two reportable segments: “Plant Engineering” and “Service Solutions”, which are based on the(Notes)1. The valuation allowance has increased by ¥254 million (US$2,288 thousand). The increase mainly consists of the additional recognition ofCompany’s business divisions in consideration of similarities of types and natures of products and services. “Plant Engineering” segment is primarily

valuation allowance relating to the provision for loss on construction contracts in the amount of ¥107 million (US$964 thousand) at the

involved in design and construction of water and sewage treatment plants. “Service Solutions” segment is primarily involved in operation, control andCompany and the valuation allowance for unused tax losses in the amount of ¥121 million (US$1,090 thousand) at a consolidated subsidiary,

repair of water and sewage treatment plant facilities.
2. Determination of sales, income or loss, assets, liabilities and other items for each reportable segment

METAWATER USA, INC.

Accounting treatment applied to the business segment reported is generally consistent with accounting treatment stated in “Important Matters for2. Amounts of unused tax losses and deferred tax assets by carryforward period

Basis of Preparation of Consolidated Financial Statements”.

As of March 31, 2019

Unused tax losses (a)Valuation allowance
Deferred tax assets

After one year After two years After three years After four years
One year or less through two
through three
through four
through five
After five years
Total(Millions of yen)
years
years
years
years
(Millions of yen) (Millions of yen)
(Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen)
1
—
—
23
—
162
187
(1)
—
—
(2)
—
(161)
(165)
—
—
—
21
—
1
22
One year or less(Thousands of
U.S. dollars)

Unused tax losses (a)Valuation allowance
Deferred tax assets

Financial Information

The Company has established business divisions by its products and services at the corporate office, each of which operates under

9
(9)
—

After one year
through two
years(Thousands of
U.S. dollars)———

After two years After three years After four years
through three
through four
through five
years
years
years
(Thousands of(Thousands of(Thousands of
U.S. dollars)
U.S. dollars)
U.S. dollars)
—
207
—
—
(18)
—
—
189
—

After five years(Thousands of
U.S. dollars)

Total(Thousands of
U.S. dollars)

1,459(1,450)9

1,684(1,486)
198

In addition, segment income is determined based on operating income, which is consistent with operating income for the consolidated
statement of income.

(a) Unused tax losses are multiplied by the effective statutory tax rate.

91

METAWATER REPORT 2019

METAWATER REPORT 201992

3. Sales, income or loss, assets, liabilities and other items by reportable segment[Related Information]
Fiscal year ended March 31, 2018

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

A description is omitted because similar information has been disclosed under segment information.

Reportable segments
Plant
Engineering
Business

Service
Solutions
Business

1. Information by products and services

Total

Adjustments(Note)

Consolidated
2. Information by region(1) Net sales

Net sales
Sales to third parties
Inter-segment sales and transfers
Net sales

64,96545,930110,895—

110,895

—

—

—

—

—
110,895

64,96545,930110,895—

Segment income

2,623

4,121

6,745

—

6,745

Segment assets

46,37449,07995,45327,499122,952

A 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

1,171

1,810

2,982

Name of customer

Net sales

Related business segment

TOKYO METROPOLITAN GOVERNMENT

17,256

Plant Engineering Business
Service Solutions Business

Other items
Depreciation

862

578

1,441

—

1,441

Capital expenditures

582

174

757

—

757

(Note) The amount of corporate assets included in adjustments of segment assets is ¥27,499 million. The corporate assets mainly represent cash and3. Information about major customers(Millions of yen)deposits and investment securities.

Fiscal year ended March 31, 2019
(Millions of yen)
Reportable segments
Adjustments(Note)

Fiscal year ended March 31, 2019

Plant
Engineering
Business

Service
Solutions
Business

Total

65,517

51,824

117,342

—

—

—

—

—

—

65,517

51,824

117,342—

117,342

Segment income

3,191

4,416

7,607

—

7,607

Segment assets

56,15846,512

102,671

29,949132,620

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
Net sales

117,342
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.

Depreciation

765

582

1,348

—

1,348

Capital expenditures

584

307

891

—

891

(Thousands of U.S. dollars)(2) Property, plant and equipment(Millions of yen)Japan

North America

Total

1,346

1,841

3,188

Reportable segments
Adjustments(Note)(Thousands of U.S. dollars)

Plant
Engineering
Business

Service
Solutions
Business

Total

590,296

466,924

1,057,230

—

—

—

—

—

—

590,296

466,924

1,057,230—

1,057,230

Segment income

28,75039,787

68,537—

68,537

Segment assets

505,973

419,064925,047

269,835

1,194,882

Consolidated

Japan

North America

Total

12,127

16,58728,723Name of customer

Net sales

Related business segment

TOKYO METROPOLITAN GOVERNMENT

19,967

Plant Engineering Business
Service Solutions Business

Name of customer

Net sales

Related business segment

TOKYO METROPOLITAN GOVERNMENT

179,899

Plant Engineering Business
Service Solutions Business

Financial Information

Other items

Net sales
Sales to third parties
Inter-segment transactions and transfers
Net sales

1,057,230

Other items
Depreciation

6,892

5,243

12,145—

12,145

Capital expenditures

5,261

2,766

8,027

—

8,027

(Note) The amount of corporate assets included in adjustments of segment assets is ¥29,949 million (US$269,835 thousand). The corporate assets
mainly represent cash and deposits and investment securities.

93

METAWATER REPORT 2019

3. Information about major customers(Millions of yen)(Thousands of U.S. dollars)

METAWATER REPORT 201994

[Information about Impairment Loss on Non-current Assets by Reportable Segment](Related Party Information)

Fiscal year ended March 31, 2018

Fiscal year ended March 31, 2018

No items to report.

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, 2019

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]

OtheraffiliateFiscal year ended March 31, 2018

FUJI ELECTRIC
CO., LTD.

(Millions of yen)

Kawasaki-ku,
Kawasaki-shi

Capital stock orcontributions(Millions of yen)

47,586

Reportable segments
Plant
Engineering
Business
Amortization
Unamortized balance

Corporate/
Eliminations

Service
Solutions
Business

Total

140

—

140

—

140

1,842

—

1,842

—

1,842

(Millions of yen)

FUJI FURUKAWAENGINEERING &CONSTRUCTION
CO. LTD.

Saiwaiku,
Kawasaki
-shi

1,970

Subsidiary of Hokkaido Fuji Electric Chuo-ku,
other affiliateCo., Ltd.
Sapporo-shi

100

Subsidiaryof otheraffiliate

Reportable segments

Amortization
Unamortized balance

Service
Solutions
Business

Total

Corporate/
Eliminations

Total

138

—

138

—

138

—

1,670

—

1,670

(Notes)1.

2.

(Held)
Direct 28.9

Purchase of
products

Entrustmentof theCompany’s
construction
contracts

Design and execution of
construction of plantfacilities, air conditioning/
electricity/building/incidental
facilities, andtelecommunications—

Sale, installation, and repairof electrical machinery andapparatus/control systems
and electronic components—

Account
title

Balance atthe end ofyear(Millions ofyen)

Purchase of
products(Note 1, 2)

9,209

Accounts
payable trade

3,846

Entrustment ofconstruction
contracts(Note 1, 2)

4,636

Accounts
payable trade

1,491

Acceptance ofconstruction
contracts(Note 1, 2)

1,143

Accounts
receivable trade

1,145

Concurrent
holding of
positions byofficers
Acceptance ofconstruction
contracts ofsaid company

Of the amounts stated above, the transaction amount excludes consumption taxes, while the balance at end of the fiscal year includes

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.

(Thousands of U.S. dollars)

Total

Corporate/
Eliminations

No items to report.

Total

Amortization

1,243

—

1,243

—

1,243

Unamortized balance

15,046—

15,046—

15,0462.

Note concerning the parent company or significant affiliated companies
No items to report.

[Information about Gain on Bargain Purchase by Reportable Segment]

Financial Information(2)Business transactions between consolidated subsidiaries of the company filing the consolidated financial statements and related parties

Reportable segments
Service
Solutions
Business

Development, manufacture,and sale of products related
to power electronics
systems, electric
generation, electronic
devices and food
distribution, and provision ofservices related thereto

Transaction
amount(Millions ofyen)

Nature oftransaction

consumption taxes.

1,670

Plant
Engineering
Business

Relationship

Total

Fiscal year ended March 31, 2019

Plant
Engineering
Business

Type of business

Percentage ofvoting rights
holding (held)(%)

Fiscal year ended March 31, 2018
No items to report.

Fiscal year ended March 31, 2019No items to report.

95

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METAWATER REPORT 201996

Fiscal year ended March 31, 2019
1.

(Per Share Information)
Fiscal year ended
March 31, 2018
(Yen)

Fiscal year ended
March 31, 2019
(Yen)

Fiscal year ended
March 31, 2019
(U.S. dollars)

Net assets per share

2,118.02

2,271.67

20.46

Net income per share

151.65199.46

1.79

Fiscal year ended
March 31, 2019
(Millions of yen)

Fiscal year ended
March 31, 2019
(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

NGK INSULATORS,
LTD.

Other
affiliate

FUJI ELECTRIC
CO., LTD.

FUJI FURUKAWAENGINEERING &CONSTRUCTION
CO. LTD.

Subsidiaryof otheraffiliate

Subsidiaryof otheraffiliate(Notes)Hokkaido Fuji
Electric Co., Ltd.

1.

Address

Mizuho-ku,
Nagoya-shi

Capital stockor
contributions(Millions ofyen)Type of business

Development, manufacture,and sale of products related
69,849to electric power, ceramics,(US$629,326
electronics, and process
thousand)technology, and provision ofservices related thereto

Percentage
of votingrightsholding(held) (%)

Purchase of
products(Held)
Direct 28.9

Transaction
amount(Millions ofyen)Account
title

Balance atthe endof year(Millions ofyen)

Purchase of
products (Note
1, 2)

1,590
(US$14,325
thousand)Accounts
payable trade

1,258(US$11,334
thousand)Concurrent
holding of
positions byofficers

Development, manufacture,and sale of products related
47,586 to power electronics(US$428,741 systems, electric generation,
thousand) electronic devices and food
distribution, and provision ofservices related thereto

Saiwaiku,
Kawasaki-shi

Design and execution of
construction of plant
1,970
facilities, air conditioning/(US$17,749
electricity/building/incidental
thousand)facilities, andtelecommunications—

Sale, installation, and repair
100of electrical machinery and(US$900
apparatus/control systems
thousand)and electronic components—(Held)
Direct 28.9

Purchase of
products

Entrustment of
the Company’s
construction
contracts

Acceptance ofconstruction
contracts ofsaid company

Purchase of
products(Note 1, 2)

Entrustmentofconstruction
contracts(Note 1, 2)

Acceptance ofconstruction
contracts(Note 1, 2)

7,268(US$65,483
thousand)

5,048(US$45,481
thousand)Accounts
payable trade

Accounts
payable trade

858 Accounts(US$7,730 receivable thousand)trade

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, 2018
(Millions of yen)

2,786
(US$25,101
thousand)

1,221(US$11,000
thousand)

831(US$7,487
thousand)

3,931

5,170

46,580

—

—

—

3,931

5,170

46,58025,923,452

25,923,379

25,923,379

Fiscal year ended
March 31, 2019
(Millions of yen)

Fiscal year ended
March 31, 2019
(Thousands of U.S.
dollars)

Profit not attributable to common shareholders
Profit attributable to owners of parent related tocommon stock
Average number of shares outstanding during theperiod (number of shares)
3.

Net assets per share are calculated on the following basis.
Fiscal year ended
March 31, 2018
(Millions of yen)

59,031

531,858

136

142

1,279

(Non-controlling interests included in the above)

(136)

(142)

(1,279)Transaction terms such as prices are determined through negotiation in each case based on a quotation as is the case with general

Net assets attributable to shares of common stock

54,90658,889530,579

transactions, as well as by reference to actual situation of the market.

Number of common stock used for calculation of net
assets per share (number of shares)

25,923,409

25,923,350

25,923,350

Of the amounts stated above, the transaction amount excludes consumption taxes, while the balance at end of the fiscal year includes
Transaction terms and the policy to determine transaction terms

No items to report.

Total net assets
Deduction from total net assets(Significant Subsequent Event)No items to report.

Note concerning the parent company or significant affiliated companies

Financial Information

55,042(2)Business transactions between consolidated subsidiaries of the company filing the consolidated financial statements and related parties

2.

1.

Net income per shareconsumption taxes.
2.

(Notes)Profit attributable to owners of parent

Kawasaki-ku,
Kawasaki-shi

Chuo-ku,
Sapporoshi

Relationship

Nature oftransaction

No items to report.

97

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98

5.

[Supplementary Schedules][Schedule of Bonds]
No items to report.

[Schedule of Loans]
Balance as ofApril 1, 2018
(Millions ofyen)

Category

Balance as ofMarch 31, 2019
(Millions ofyen)

Balance as of
Balance as ofApril 1, 2018
March 31, 2019
(Thousands of U.S. (Thousands of U.S.
dollars)
dollars)

Averageinterest rate(%)

Due date

Short-term loans payable

269

337

2,423

3,036

3.76

—

Current portion of PFI andother project finance loans

833

844

7,505

7,604

1.06

—

Long-term loans payable

2,050

1,847

18,47016,641

3.23

April 25, 2022 toJanuary 14, 2026

PFI and other projects financeloans

11,54910,705104,054

96,4501.16

June 22, 2026 toNovember 30,
2033

Total

14,703

13,733

132,471

123,731——(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 date

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

281

281

451

277

PFI and other projects
finance loans

855

862

873

885

Category

Financial Information

Category

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

2,531

2,531

4,063

2,495

PFI and other projects
finance loans

7,703

7,766

7,865

7,973

[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.

99

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Corporate Information
Corporate Overview
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.

Construction
Industry Qualifications

Stock Exchange listing		

April 1, 2008

Number of employee

2,977

List of bases

Head Office:
JR Kanda Manseibashi Bldg., 1-25 Kandasuda-cho, Chiyoda-ku, Tokyo 101-0041
Hino Branch:
3-1-30 Asahigaoka, Hino, Tokyo 191-0065			
Nagoya Branch:
Nagoya Prime Central Tower, 2-27-8 Meieki, Nishi-ku, Nagoya, Aichi 451-0045

First section of the Tokyo Stock Exchange
Industrial Classification：Electric Power and Gas. (code: 9551)

Total number of authorized shares

70,000,000 shares

Total number of issued shares

25,923,500 shares
4,291

Breakdown of shareholders
Financial institutions

Other domestic corporation

Private & Others

16.35%

58.60%

5.78%

Yasushi Nakamura*As of March 31, 2019, consolidated

Financial instruments
business operators

TEL:+81-(0)3-6853-7300
TEL:+81-(0)42-589-6900

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.*
Toriden-Shoji Co.
METAWATER USA, INC.*
Akebono Engineering Co.
Aqua-Aerobic Systems, Inc.*
Water Next Yokohama Co., Ltd.*
Mecana Umwelttechnik GmbH*Techno Clean Hokuso Co.*
METAWATER TECH Co., Ltd.
Aqua Service Aichi Co.*
SIC Co., Ltd.			
*: Scope of consolidated statement
USA, Netherlands, Vietnam, Cambodia, Singapore

Foreign corporation

18.16%

1.08%

Status of dominant shareholders (Top 10)

TEL:+81-(0)52-884-6800

Main sales bases

Name of shareholder

Number of shares owned(1,000 shares)

Percentage ofshares owned(%)

NGK INSULATORS, LTD.

7,500

28.93

Fuji Electric Co., Ltd.

7,500

28.93

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

1,408

5.43

Japan Trustee Services Bank, Ltd. (Trust account)

917

3.53

JP MORGAN CHASE BANK 385632

860

3.31

GOVERNMENT OF NORWAY

627

2.41

Japan Trustee Services Bank, Ltd. (Trust account 9)

626

2.41

The Nomura Trust and Banking Co., Ltd. (Trust account)

437

1.68

MSIP CLIENT SECURITIES

268

1.03

GOLDMAN SACHS INTERNATIONAL

210

0.81

Corporate Information

METAWATER REPORT 2019

*As of March 31, 2019

Number of shareholders

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
Chairman and
Representative Director

Overseas bases

101

Stock-related matters

METAWATER REPORT 2019102

Corporate Information

Map of bases as of March 31, 2019
We have approx. 40 domestic sales and service bases
to deliver 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

METAWATER USA, INC.
Headquarters
Mae-chanAqua-Aerobic Systems, Inc.

Tah-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 andsymbiosis of METAWATER with the environment.

Europe Representative Office
Rood Wit Blauw Holding B.V.
Mecana Umwelttechnick GmbH

Issuing the “METAWATER REPORT 2019”

Hanoi Representative OfficeCambodia Representative Office• Period in the scope of reporting

Singapore Representative Office

The performance for FY2018 (fiscal year ending March 2019) is the main scope for this report. However, some events in this report may have occurred before
or after this period.

Corporate Information

As 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.

• Reference guidelines
ISO26000 (International Standard of Social Responsibility issued in November 2010)
Ministry of Environment: Environmental Reporting Guidelines (Version 2018)• 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 office

103

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104

METAWATER Co., Ltd. : JR Kanda Manseibashi Bldg., 1-25 Kandasuda-cho, Chiyoda-ku, Tokyo 101-0041