METAWATER REPORT 2020
The Fiscal Year Ended March 2020

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Continue,to make it sustainable.

We continue to collaborate with our partners.
We respect our partners and work to achieve withdiverse knowledges, technologies and cultures.
We continue to innovate for the future.
We experiment in new ideas and take challenges.

I continue to stably operate water
purification plants.
So that the lifeline that iswater can be protected.

To make sustainable what is truly important.

METAWATER SERVICE Co., Ltd. O&M Division

I continue to make suggestions topromote recycling in the future.
So that we can continue to support
a recycling-oriented society.

Management and Operations Overview

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

Service Solution Division

Shinya Asano

Yukihiro Yamazaki

I continue to passionately
carry out research and development.
So that I can make water better.

I continue to offer sincere customer service.
So that I can earn the trust of all those
who use our waterworks.

Business Strategy Division, R&D Center

Public Private Partnership Division Div., Regional Project Promotion Dept.
Arao Management Group

Yusuke Hisamoto

I continue to suggest
the best technologies.
So that I can ensure safe
and secure water is the norm.

I continue to make the most of
my team’s strengths.
So that we can continue
our climb to the top.

Plant Engineering Division

Business Strategy Division, R&D Center

Masahiro Ito

Masayo Yoshida

Hirokazu Goto

Special website
Interviews and movies introducing the thoughts and efforts of various
employees aiming for the realization of the corporate philosophy,“Continue, to make it sustainable. ”

Zokuzoku ProjectContents
1

Corporate mission

3	Looking toward the future of the water supply

https://www.metawater.co.jp/zokuzoku/

Glossary
21

METAWATER business developments

37

METAWATER Group’s ESG

EPC

Design and construction of facilities and equipment

23

Sustainable creation of corporate value

39

Environment

O&M

Operation and maintenance of facilities and equipment

businessand contributions to society and the global

45

Social

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 ofefficiency and quality of services are sought by making positive use of private funds, technologies, know-how and management skills.

7

Top management’s message

environment

55

Governance

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

11

Top interview

Business highlights

63

Financial Information

DBO

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

101 Corporate Information

DB

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

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.

25

17

The history and growth of METAWATER

28

Topics19

Performance highlights

29

Introduction to business operations

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 2020

METAWATER REPORT 20202

Looking toward the future of the water supply businessトップメッセージ

Akira Koizumi
Distinguished Professor, Doctor of Engineering, and Professional Engineer (water supply andsewerage) for the Department of Civil and Environmental Engineering, Tokyo Metropolitan University.
Born in Kanagawa Prefecture. After graduating from Tokyo Metropolitan University, he worked asa waterworks consultant for 10 years. He became a Lecturer at the Tokyo Metropolitan University
Department of Engineering in 1980, an Assistant Professor in 1983, and a Professor in 1994.
He has been a Professor in the Department of Civil and Environmental Engineering since 2005,
a Distinguished Professor since 2012, and the Director of the Research Center for Water System
Engineering since 2015. His specialty is water system engineering. He has experience serving on thegovernment, the Japan Water Works Association (JWWA), the Japan Water Research Center (JWRC),and a number of water utilities.

Waterworks have moved from an era of installation and expansion to one of maintenance and renewal.
Pursuing efficient and economical operation and maintenance that can respond to changes in the businessenvironment, and the sustainability of a safe and secure water environment. It is our responsibility to provide that for
future generations.

Nowadays, “gratitude” for waterworks is gradually being
forgotten, instead being replaced with a sense of them
being “a matter of fact”
Our country’s waterworks have achieved a high level ofcoverage of 98%, providing a safe and stable water supply likeno other in the world. I believe this is the result of the untiring
efforts of water suppliers, forward-looking investments
in facilities, and the development and innovation of newtechnologies. On the other hand, it can also be said that trustand cooperation on the part of citizens and local residents havehelped to build the world’s highest level of water supply.
However, recently when I hear about waterworks, it’s that
their existence is “a matter of fact”, and that if there is evena slight problem, complaints will not stop. For example, in thepast it was said that tea would be given out when work on
water pipes was being done, but now it seems that with thequake-proofing work for pipelines being performed, it is not tea
being served, but complaints. I believe that this is because theworld is forgetting about the gratitude they should be having
for waterworks in the first place. When I ask students whoare just starting school at Tokyo Metropolitan University, they
understand the value of tap water, but aren’t sure about any

toward the next generation. In other words, the 21st century
is the time to rebuild our waterworks.To that end, industry,
government, and academia must work together to integrate
their superior technologies and ingenuity into a next-generationwater system that is “for the benefit of the world and all its
people”.
Cooperation among industry, government, and academia
is essential for the realization of next-generationwaterworks
It is said that waterworks assets amount to about 46 trillion
yen, of which close to 70% are pipelines, or so-called water
pipes, and which span approximately 680,000 kilometers
throughout Japan. This corresponds to a distance of 17
revolutions around the Earth’s equator, and these pipelines
must be properly renewed. Recent pipelines are manufactured
with a lifetime of 100 years, so a renewal rate of at least 1%
is necessary. However, at the current renewal rate of 0.75%,[Fig. 1] Main themes of the Research Center
for Water System Engineeringof the details behind it, including how it is normally purified
and distributed, how used water is collected and purified once
more, etc. I think this lack of understanding leads to a “virtualworld” where we believe that our present conveniences will
last forever, without any effort on our parts.
This “matter of fact” thinking is not only showing theindifference residents have regarding waterworks, but is also a
dangerous sign that gratitude is disappearing.
Technology and research must always be moved forward in apositive way, as it is said that if you stop, you will start moving
backwards. I think we are entering an era in which we are notsatisfied with the current situation, and are taking new steps

METAWATER REPORT 2020

as research on water treatment processes, an appropriate
renewal plan for pipeline systems, and an investigation ofdeterioration factors in waterworks facilities. (2) covers

renewed in a timely manner and need to be robust enough towithstand disasters such as earthquakes and typhoons. Only
when these facilities and pipelines come together can safe anddelicious tap water be supplied.
Five years ago, Tokyo Metropolitan University establishedthe “Research Center for Water System Engineering” withthe aim of realizing a “next-generation water system” that
could continuously supply safe and delicious water. The
three pillars of the Center’s research are (1) water operation
planning, (2) next-generation pipeline systems, and (3) nextgeneration water resource management. (1) covers topics suchpreventive maintenance of water leakage accidents and controlof tap water quality. (3) covers management of reservoir water
quality and investigation of river catchments. The water supply
field is closely related to all faculties in the university (notonly engineering but also science, law, economics, sociology,
psychology, international studies, etc.), and I believe it is truly
a comprehensive academic field. [Fig. 1]
It is clear that the cooperation of industry, government,
and academia mentioned above is essential to sustain andstrengthen our aging and deteriorating water system for the
future. [Fig. 2][Fig. 2] Prospective image of waterworks in the future(dammed lakes and rivers)

Management offouling matter in pipes

Water operation
planning sector
Water leakage
prevention and non-revenue
water management

Analysis of groundwater
volume and quality

Water
resources sector

Pipeline system
sectorDelicious water(water treatment facilities)

Facility renewal plans

Quantification andevaluation offacility deterioration

Next-generation information
management system

GPS utilization
Location information is used to measureaccurate data of the constructedpipelines in normal times. Monitoring
for abnormalities is carried out in thecase of a disaster.

(water quality, energy saving)

Source: Tokyo Metropolitan University Research Center for Water System Engineering pamphlet

3

it will take more than 130 years, which is far from acceptable.
This will leave a “negative legacy” for the future.
Similarly, water treatment and water source facilities must be

Water operation plans
Water source water
quality management

Management and Operations Overview

Public-private partnerships are an unstoppable global
trend moving toward next-generation water systems
from a long-term perspective

Disaster prevention
information center

Data from sensors can be centrally managed,
and accurate pipe network analyses and design
integration hazard maps can be used, centeredon piping diagrams. It also cooperates with thedisaster prevention information center.

Cloud computing
Saves big data. Backups occur
automatically. Facilitates cooperation
with other business entities.

Various sensors
Various sensors are placed in
key points of pipelines, suchas access chambers, valves,etc. They wirelessly transmit
data such as water pressure,flow rate, and water quality.

Construction
management system• Remote control of automatedconstruction machinery.
• Construction is possible under poor
conditions.
• Tablets are used to check piping
diagrams, etc., sent from theinformation management system.

Smart meters
They wirelessly transmit datasuch as water pressure, flow
rate, and water quality.
Source: Pipe Stars Project Report, Japan Water Research Center

METAWATER REPORT 20204

Looking toward the future of the water supply businessトップメッセージ

and AI, “human power” remains important
In the late 1970s, when I was working as a consultant,
I was in charge of a number of wide area water supply
projects, and while I recognized the need to fully consider
the history and climate of the target area, I felt the need fora “greater area that transcended prefectural boundaries” interms of management and technology. As I encounter theexhausted reality of small- and medium-sized water supply
businesses today, I am keenly aware of the need for wider area
management. This is just one proposal, but if we focus on thetechnological capabilities of specific private companies (orJV is also possible), I believe it is possible to technologicallymonitor numerous small- and medium-sized waterworks.
For example, nearly 10 years ago I was surprised when I visitedthe waterworks in the suburbs of Melbourne, Australia. Seven
water treatment plants scattered across a vast water supply
area were being remotely controlled and operated by a single
private engineer on an iPad. As ICT and IoT technologies
continue to advance along with the evolution of AI, weare entering an era in which a wide range of areas can be
managed. With the latest technology from private companies,
waterworks management for large areas is no longer just a
dream. Needless to say, however, it is necessary to improvethe various laws and institutions and make efforts to connect5pipes for the first time in Japan. They are searching for a newwide area cooperation that covers not only the Hachinohe area
as a wide area water supply, but also the northern area of

was undulating, and the turbidity of the water treated in thesedimentation tank was high, placing a heavy burden on thesubsequent filtration tank. Meanwhile, workers were sweating

Expect management and optimal investments fromprivate companies, and opportunities for young people
involved in waterworks to play an active role

Iwate Prefecture, crossing prefectural borders. Alternatively,
the introduction of private-sector participation in the waterover low wages due to the staggering labor gap, while highly
educated, high-income “high class” operators made decisions

supply business in Aizuwakamatsu City, which I assisted withfrom the planning stage, is centered on collaboration between
companies with outstanding water treatment technologies
and management capabilities, and local companies that are

based only on inaccurately measured numbers, without everlooking at the site itself. [Photo 2]
This is just one example, but we often see water technologies
that took us 100 years to grow being introduced in emerging

The worldwide trend toward public-private partnerships
is unstoppable, and will further increase with the passageof time. With this, the work traditionally performed by the
public will instead be done privately, but I urge us to place

well-versed in local conditions. This “Aizuwakamatsu method”
has attracted nationwide attention and is the new “wisdom”
created by human power and the human heart.[Photo 1]

countries in a sudden leap. In other countries, despite frequent
blackouts on a daily basis, I have seen water treatment
plants that are “fully automated” yet are unable to fulfill their
original functions. Going from 0 to 100 isn’t feasible, as things[Photo 1] Takizawa Water Treatment Plant in Aizuwakamatsu City

[Photo 2] Nzove Water Treatment Plant in Kigali (photo by author)

the world of fiction with the world of reality. In this area, you
may find management points where private companies canplay an active role.
Waterworks are systems with their feet firmly planted to theground, and we have no choice but to rely on human power

It is important to not only sell things, but to train people
when providing overseas support
Many companies are turning their attention to overseas waterbusiness, but there are various risks involved in working
overseas, and a perfect batting average is just not possible. I

generally need to develop over time, but those in charge seemto always want the latest cutting-edge technology. For the sakeof the community, I believe that it is important to introduce asystem appropriate for the actual situation with courage andconviction.

in cases of emergency construction, disasters, etc. In thethink that normally, Japanese companies should be responsible

One example of this is the “MaWaSu”, the Project for

future, this work may be replaced by robots, but ultimately
the premise of “human power” cannot be eliminated. I believethat perspective of “human power” will become especially
important in Japan. What underlies this is the “human heart”,
which sincerely addresses the ideal form of “sustainability”

for the ODA budget, but in reality, often times it is foreigncompanies who are responsible for this.
Two years ago, I had the opportunity to visit the waterworks for
the Republic of Rwanda (formerly a Belgian territory), locatedin East Africa. At a water treatment plant in the capital city of

Improvement of Management Capacity of Water Supply
Sector, with the aim of improving the management capabilities
of Water Supply Authorities in Laos. “MaWaSu” provides
technical assistance in close proximity with local engineers,and I think this is what our country should be doing. In otherfor waterworks in each region. For an advanced example ofKigali, an instrumentation facility was installed by a Turkishwords, I believe that the most important aspect of technicalthis, look at the Hachinohe Regional Water Supply Authority
in Aomori Prefecture, known for adopting earthquake-resistantcompany and controlled using the latest equipment, known asa SCADA system. However, the water surface of the clarifierassistance regarding waterworks is not just selling things, but
training people first.

METAWATER REPORT 2020

Management and Operations Overview

Even if wide area waterworks management becomes
possible thanks to the evolution of ICT/IoT technology

great importance on the feeling that “waterworks are for the
benefit of the world and all its people”. I also hope that wewill continue to put forth effort to develop technology andimplement various ideas. To that end, it is important to work
together with a long-term perspective to the greatest extent
possible, and I hope that a mentality of cutting corners andproviding cheap products driven by a desire for short-term
profits will not prevail.
The elements of a water system are diverse and sustained
based on multifaceted assessments. The unit of time for thismust be considered from a perspective of at least 100 years,
or even 1000 years in some cases. Up to now, I’ve been sayingthat the public side considers water resources and pipelines on
a 50- to 100-year-plus basis, while the private side pursues theefficiency and economics of facilities such as water treatment
plants on a 10- to 20-year basis, believing that public-private
partnerships would combine the best of both worlds.
In the future, expectations will be placed on private companies
not only from the perspective of construction, operation andmaintenance, but also from the perspective of management
and optimal investment based on renewal.
Furthermore, it is important to give opportunities to the next
generation of young people who are interested in the field ofwater supply and carry out public relations activities in whichyoung people want to be involved. Education and research on
the waterworks at universities and high schools are of course
necessary, but I am looking forward to the arrival of an era inwhich water supply-related fields grow significantly and young
people will be able to play an active role in supporting futurewater systems.

METAWATER REPORT 20206

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Top management’s message

worked as a corporate group engaged in the social infrastructure indispensable to industries
and people’s lives, promoting the fusion of mechanical technology, electrical technology,
Top Message

Water supply and sewage works
are essential for preventing
the spread of novel coronavirus
infections.
The METAWATER Group iscommitted to sustaining
the water and environmental
infrastructure that is indispensable
to people’s lives.

Management and Operations Overview

In April 2008, the METAWATER Group was established as the first comprehensive engineering
enterprise in Japan engaged in the water and environmental fields. Since then, we have

ICT, and operation and maintenance know-how, to develop our water, sewage, and resource
environment (waste recycling) businesses. Much of Japan’s water and sewage infrastructure
was developed during a period of high economic growth, and the aging of these facilities andequipment is becoming more serious. Measures to protect against natural disasters such as
earthquakes, torrential rains, and typhoons, which have been occurring frequently in recent
years, are also a major issue.
Additionally, the global spread of the novel coronavirus since January 2020 has increased therole water supply and sewage works play, which are a cornerstone of public health. However,
local governments that plan and operate water and wastewater business are having problemsof their own, such as a shortage of engineers and a decreased income due to a declining
population.
In order to solve these issues, wider area management and further comprehensiveness throughpublic-private partnerships (PPP), which have been examined up to now, are now moving fromthe examination stage to the implementation stage, including legal development. Our Grouphas been steadily building up its track record, developing technologies that make use of ICT,
etc., and formulating concrete codes of conduct that can be shared by all Group employees.
We are finally ready to move on to concrete measures. We will continue to make sincere

Yasushi Nakamura
President and Representative Director

efforts to become a corporate group that can be entrusted with social infrastructure withpeace of mind and contribute to the sustainability of water and environmental infrastructure,
which is essential to people’s lives. We will also contribute to the United Nations’ “Sustainable
Development Goals (SDGs)*1” through both business and CSR activities.

Before being designated as the President and Representative Director in June 2016, he experienced a series ofmanagement 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 memberof the development of the Water Business Cloud (WBC), and is well versed in business execution in a wide
range of fields supported by his affluent experience.

7

METAWATER REPORT 2020

METAWATER REPORT 20208

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Top management’s message

The business environment surrounding us is undergoing majorchanges. Aging facilities and equipment are being renewed,
measures against natural disasters are being taken, and thebusiness continuity of water and environmental infrastructure
is becoming increasingly more important as a cornerstoneof public health. In response to these changes, our Group
is strengthening our corporate structure in order to realize
our long-term vision of 200 billion yen in sales, through theimplementation of the “Mid-Term Management Plan 2020”(April 2018 to March 2021).
Under the “Mid-Term Management Plan 2020”, in addition toconventional development investments, we will implement
development of products, solutions, and new businesses as“strategic development investments” that are essential for
medium- to long-term growth. As part of our business strategy,
we are capturing replacement demand and reinforcing theEngineering, Procurement and Construction (EPC) business,while at the same time steadily increasing the Operationand Maintenance (O&M) business, which is one of our stockbusinesses. We are also working to expand our PPP and overseas
businesses, which are growth areas, through regional and partner
strategies that capitalize on our achievements thus far.
Regarding the PPP business, the implementation of the “revised
Water Supply Act” in October 2019 is expected to increase thenumber of further comprehensiveness projects as well as thedemand for wider area management projects represented byconcessions. The METAWATER Group has participated in about
half of the approximately 60 PPP projects in the water supply
and sewage field, and has been involved in a variety of further
comprehensiveness projects. Looking ahead to the full-scale
implementation of wider area management projects in the“Mid-Term Management Plan 2020”

future, we will further promote reductions in construction costs
and improvement of operation and maintenance efficiency
through the incorporation of cutting-edge technologies such as
AI and ICT in addition to the “three centers” centered aroundthe “Training center for facility operators”, “Supply center forparts”, and “Knowledge center”. In addition, we will contributeto the sustainability of water and environmental infrastructure
through “WOODAP* 2”, our original concepts for design,
construction, operation, and maintenance centered aroundquick recovery of water and sewage facilities in the event of adisaster.
As for our overseas business, in addition to the German
company FUCHS* 3 joining our Group in May 2019, theAmerican company Wigen*4 joined us in April 2020. As a result,in North America, AAS*5, which offers wastewater solutions,and Wigen, which offers water supply and reclaimed drinking
water solutions, have joined forces to strengthen our businessplatform. In Europe, we are expanding the use of filtration
technology in response to the strengthening of environmental
regulations. In Asia and other regions, we will continue toaddress local needs through means such as the use of ODA*6.
On the capital policy front, in November 2019, we acquired 4.2
million shares of our company stock held by NGK INSULATORS,
LTD. and Fuji Electric Co., Ltd. (2 million shares from NGK and
2.2 million shares from Fuji Electric) through a tender offer,and increased our year-end dividend forecast for the fiscal year
ended March 31, 2020 to 40 yen per share, enhancing capitalefficiency (ROE) and returning profits to shareholders.
We have also been promoting further work style reforms, such as
by improving the telework environment and shortening scheduledworking hours. In the future, as a second stage we will work toreform the work flow and create a working environment where
employees can actively work with a high level of productivity.

1

Expanding strategic
development investments

Strengthening and2
expanding business3

Engaging in continued
ESG initiatives

Enhancing development of products,
solutions, and new businesses that are
essential for medium- to long-term growth
Promoting efforts to strengthen coreareas and expand growth areas
Promoting activities that contribute to
the environment and local communities,
as well as actively strengthening
corporate governance(Consolidated)

FY ended March 2019
(Results)

FY ended March 2020
(Results)

FY ending March 2021
(Targets)

Orders received

123.8billion yen

125.0billion yen

140.0billion yen

Sales

117.3billion yen

128.7billion yen

130.0billion yen **Operating profit
Net profit
ROE

7.6billion yen

8.2billion yen

1

METAWATER REPORT 2020

The METAWATER Group is the first water and environmental
infrastructure company to be classified as a “electric powerof mind. We believe that these efforts can only be achieved
through “partnerships” with citizens, local governments,
partner companies, and local companies all working together.
We will continue to consider and promote concrete measuresand gas” on the Tokyo Stock Exchange by industry, and ourbusiness activities themselves play a role in CSR. We also
believe that as a good corporate citizen it is our responsibility

5.2billion yen

5.7billion yen

6.2billion yen

9.1%

10.5%

10.0% or moreto achieve these three goals of the SDGs.

to continue to be a fair and sincere company and to contributeto the sustainable development of society and the global
environment through both our CSR and business activities.
To this end, in light of the expectations of our stakeholders
and changes in society and the business environment, we
will strengthen and sustain our ESG (Environment, Social, andGovernance) initiatives to become a company trusted by all.
With regard to the environment, we are promoting
environmental protection and conservation activities throughour business activities. Regarding society, we are promoting
work style reforms and diversity based on the idea that “people
are our greatest asset”. We are also promoting initiatives forsafety, health, and quality, as well as environmental awarenessand community contribution activities. As for corporate
governance, we are working to enhance the efficiency andstrength of our management structure, including compliancewith the Corporate Governance Code, and strengthen risk
management, including achieving more thorough complianceand strengthening internal control functions, BCP* 7, andinformation security. We are also aiming to achieve highly
reliable and transparent management through active
communication with stakeholders in accordance with our
Disclosure Policy. Of the 17 SDGs, we have positioned Goals
6, 11, and 17 as priority areas. We take the “for all” part ofGoal 6, “ensure availability and sustainable managementof water and sanitation for all” seriously, aiming to create aStage 1

Resolution on
FY ended March 202010increase in% operational efﬁciency

In-vehicle ceramic
membrane filtration
systemDelivering mobile water purification
systems to emerging countries in Asia
and Africa to ensure a safe water supply
even in the event of a natural disaster

SDGs the METAWATER Group is focusing on*1 Sustainable Development Goals (SDGs)
	Adopted by the United Nations in 2015 with the aim of achieving a better and sustainable world
by 2030. It consists of 17 goals and 169 targets to achieve said goals.
*2 	WOODAP: Concepts for design, construction, operation, and maintenance centered around quick
recovery in the event of a disaster*3 FUCHS Enprotec GmbH
*4 Wigen Companies, Inc.
*5 Aqua-Aerobic Systems, Inc.
*6 Official Development Assistance (ODA)*7 Business Continuity Plan (BCP)

Promotion of work flow reforms
Stage 2

Stage 320

FY ending% from the previous year
March 2021 Up
30% total increase together with Stage 1

Institutional reform

Work flow reforms

Development of the PPP business

1

Development of a remote business environment

1

Review of operations (applying WOODAP)

1

Analysis of operation management① Development of an ICT environment② Development of satellite offices③ Recommending working from home2

Promote outsourcing

2

Sophistication of operations

3

Organize a specialized organizationthat performs only common tasks

9.0billion yen**1 On April 27, 2020, forecast sales for the fiscal year ending March 2021 were revised from 128.0 billion yen
to 130.0 billion yen

9community where everyone has access to clean water andsanitation, and can continue to live with comfort and peace

Goals of the Mid-Term Management Plan

Establishing a business structure capable of realizing our long-term vision
Key measures

We aim to be a company that can contribute to the SDGs
as a water and environmental infrastructure company.

Management and Operations Overview

We will continue to implement bold measures to
respond to the rapidly changing business environment.

2

Expansion of non-core flex time operation

3

Introduction of a four-day workweek system

4

Reduction of regular working hours

5

Implementation of ABW**2 (May, West Japan)

Productivity improvements + quality improvements +safety assurance

4

Highly transparent performance evaluations
ASHITA-TEAM “Zettai! Hyoka®” “ASHITA-CLOUD™ HR”
5 Preparation for the DX era
30% of the time created will be spent preparing DX**2 ABW (Activity-Based Working): A system for improving performance by selecting a work place according to the work content and purpose (Refer to Topics on page 46 for details)

METAWATER REPORT 202010

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Top interview

Yoshiharu Izumi

Working toward sustainable water andenvironmental infrastructure
Yoshiharu Izumi, who is currently working as an analyst, conducted an interview with President Nakamura via video conference,asking about the progress of the “Mid-Term Management Plan 2020” and METAWATER’s initiatives toward achieving its goals forthe final year of the plan.

Yasushi Nakamura

Yoshiharu Izumi

METAWATER Co., Ltd.
President and Representative Director

Corporate Research Department, SBI SECURITIES Co., Ltd.
Senior Analyst

After graduating from Faculty of Letters, Doshisha University, he joined Elco International (now KyoceraElco). He received his MBA from the University of Birmingham in the UK. Since 1991, he has been involved inindustry and corporate analysis for industrial electronics, consumer electronics, semiconductors and electronic
components at UBS Phillips & Drew Securities (now UBS Securities) and J.P. Morgan. He took up his current
position in April 2018. He is an accredited analyst with the Securities Analysts Association of Japan.

What can you tell us about efforts regarding
PPP (public-private partnership) projects, which
are areas of growth?
Two concessions are currently under way: the “Miyagi

The fiscal year ended March 2020 was thesecond year of the “Mid-Term Management Plan
2020” (FY ended March 2019 to March 2021). Could you
summarize the company’s performance for thisimportant period?
The long-term vision of the “Mid-Term Management Plan
2020” is achieving sales of 200 billion yen. To accomplish
this, companywide we are focusing on key measures: (1)strategic development investments such as the developmentof new products and incorporating cutting-edge technologies
such as AI and ICT, (2) business strategy (strengthening coreareas and expanding growth areas), and (3) engaging incontinued ESG initiatives.
For the fiscal year ended March 2020, our second year, sales
increased favorably in both the PE business (domestic EPC,
overseas) and the SS business (O&M, PPP). As for profit,
after making the strategic development investments asplanned, we achieved increases in operating profit, ordinary
profit, and net profit. Both sales and profits were generally inline with the forecast (October 29, 2019). Orders received for
waste recycling facilities were strong, exceeding both theprevious fiscal year results and the forecast, and the orderbacklog remained at a high level.
In the fiscal year ending March 2021, the final year of theplan, in addition to an increase in sales, we expect an
improvement in profitability due to an increase in the numberof highly profitable completed projects and a reduced impact
from low-gross margin projects. We will continue our■ Trend regarding number of PPP projectapplications and participation by our company
in the water supply and sewage field

to “wider area management + further
comprehensiveness”(Example)● Projects from facility design and construction to operation,

Operation and maintenance

WOODAP

Procurement

Training the operators
responsible for equipment
operation in each region

Knowledge center

Centralization of
procurement and supplyof repair parts, etc.

Operation

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

maintenance, and management● Projects undertaken by local governments for management,planning support, collection of fees, resident support, etc.

75

Supply center forparts

Training center for
facility operators

Of the approximately 60 applicationsin the water supply and sewage field,
our Group is participating in 31 ofthese projects(Cumulative
total)■ Mass benefit management corresponding

People / Information / Goods

50

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

Number of applications (Cumulative total)
METAWATER participation (Cumulative total)

25

company-wide efforts to achieve the plan.
0
FY200511

METAWATER REPORT 2020

Facility A
FY2007

FY2009FY2011FY2013

FY2015FY2017FY2019FY2021

Facility D
Facility B

Facility C

Prefecture integrated water supply, industrial waterworks,
and sewage public-private partnership management project”
and the “Kumamoto Prefecture Ariake/Yatsushiro industrial
waterworks operation project”. These two projects areimportant for predicting whether PPP will accelerate in thisManagement and Operations Overview

Top Interview

field or whether the current situation will continue for thetime being.
The Group has involved in a number of further
comprehensiveness projects, including some where wehave been entrusted with everything from the design andconstruction of facilities to their operation and maintenance,
as well as others where we provide services traditionally
undertaken by the local governments, including management
and planning support, collection of fees, and resident
support. In anticipation of the full-scale implementation ofwider area management projects, in addition to establishing
the three centers, “Training center for facility operators”,“Supply center for parts”, and “Knowledge center”, weare working on reducing construction costs and improving
operation and maintenance through the incorporation of
cutting-edge technologies such as AI and ICT. In addition,
our company has established a unique code of conduct
called “WOODAP”, dealing with design, construction,
operation, and maintenance centered around quick recovery
of water and sewage facilities in the event of a disaster. By
establishing a concrete code of conduct that can be sharedby all Group employees, we are finally ready to enter the PPP
market, which we have been aiming for since the company
was established.

What kind of method is WOODAP?
Together with PDCA (Plan, Do, Check, Action), which has
traditionally been regarded as a problem-solving process,
OODA (Observe, Orient, Decide, Act) has recently attracted
attention. This method starts with observing the site
(Observe), identifying the situation and guiding the direction(Orient), making a quick decision (Decide), and executing

METAWATER REPORT 202012

トップメッセージ
Top interview

disasters of a similar scale, we set a recovery timeline ofthree days and then train for this situation over and overbe reconstructed next?”, and “Should spare parts be kept
individually or at a parts center widely?”, from a perspective(removing impurities from water), demonstrating our value
through the filtration technology. The METAWATER Group

that soldiers could respond quickly by making decisions on
the spot based on thorough observation, instead of needing
to wait for approval from headquarters each time.

again. As individual issues pop up in training, such as “Whatabout electricity?”, “What about piping?”, or “What about
the operators?”, the results of OODA training, primarilyof flexible resilience, which focuses less on “How can we
prevent it from breaking?” and more on “What should bedone for immediate recovery if it does break?”calls this the “Remove strategy” and allocates management
resources in a graded manner. The reason why we arefocusing on filtration technology is because of our unique“WOODAP” is “W + OODA + P”, with the “W” standing for
Wisdom and effort, and the “P” standing for Preparation.
OODA is sandwiched between “wisdom” and “preparation”.

the “Observe” aspect, are reflected in the next iteration oftraining. The concept is to link the large, slow PDCA cycle ofthe Head Office with the OODA loop, which enables a site

With the progression of PPP, we would like to respond tothe concerns of citizens and the question of “Can we leave
water to the private sector?” by clarifying our code of“ceramic membrane”. Rather than lifting up our weaknesses
to be on par with others, we want to maximize our strengths
so that they can’t be imitated. We want people all overA timeline with clear goals are set, and preparations are
made to achieve them. It is necessary for everyone to share
their wisdom so that accurate decisions can be made onsite in an emergency and preparations can be made forto act promptly, by “picking out the best parts”. In addition,
activities for considering the ideal way to implement
these so-called “high-speed recovery” operations expand
beyond the framework of operations to include design

conduct. That code of conduct is “WOODAP”.

the world to rely on us, so that when they think “I want toget something out of the water”, they think “Let’s talk to
METAWATER.” As such, we have inevitably decided to focus

a solution. For example, let’s assume a meter of flooding
caused by a catastrophe. Recalling past experience withand construction as well. This is reflected in questions
such as “What should be standardized?”, “What should

W h i l e t h e M E TAWAT E R G r o u p ’s a i m i n J a p a n i s“comprehensive strength”, covering everything from design

on M&A in promoting “Deep Technology” and the “Remove
strategy”.
In addition to incorporating the U.S. wastewater treatment

and construction to on-site operation and management
regarding water and sewage systems, our aim overseas is
the pursuit of “Deep Technology”. As the Group still lacks
a track record of “comprehensive strength” in Japan, we
are unable to implement strategies that take advantage ofour track record, as the overseas “Water Majors” corporategroup does. With the current situation, we believe that it
is important to compete with technological capabilities
that quickly lead to high evaluations in order to build
up achievements overseas and raise awareness. Of all
our technological capabilities, we will focus on filtrationengineering company Aqua-Aerobic Systems (AAS) into
our Group, in May 2019, we added the German company
FUCHS Enprotec (FUCHS), and in April 2020, we added the
U.S. company Wigen Companies (Wigen) to our Group as
well. FUCHS has strengths in the development, design, andmanufacture of air diffusers and agitators for wastewater
treatment, while Wigen specializes in the development,
design, and manufacture of water treatment equipment suchas membrane treatment and ion exchange. As a result, theGroup now has a strong sales channel covering the entire
United States and we are able to respond to a wider range■ Linking the PDCA cycle and the OODA loop
PDCA cycle

OODA loop
Observe

Head Office

Plan

Do

Set a timeline

Train

P

One meter offlooding

D

OrientOn siteCollect objective
information

Analyze information,assess the situation,and set a direction

O

O

O

O

O

O

A

D

A

D

A

D

Electricity?

Piping?

Operators?

What can you tell us about initiatives in theoverseas business, another area of growth?

Management and Operations Overview(Act). It was originally used during war, especially on thefront lines where the situation was constantly changing, so

How can we recover in three days?
A

C

ActionCheck

PrepareStudy

Layout changes
Preparation of
spare parts

Cycle : Several months to a year

……… ?

……… ?

……… ?

O

O

O

O

O

O

A

D

A

D

A

D

Act

DecideExecuteMake decisions
based onspecific measures

Cycle : One hour to several months■ Our Group and partner companies in the overseas business

EuropeNorth America
Provision of business resourcesAsia■ Timeline control

Fast recovery toa specified service level

Disaster occurs

Development of core products
Development oftechnologies and products™

SupplyAllow for a certain
amount of “fragility”

Conventional
TargetLimit

13

METAWATER REPORT 2020

Time

TargetConventional

Limit

MECANA
FUCHS
RWB
PWNT

(a subsidiary of AAS)
(a subsidiary of AAS)
(capital and business alliance partner)(partner company: a subsidiary of the Dutch water authority)

METAWATER REPORT 202014

トップメッセージ
Top interview

Filtration technology

Pretreatment(REMOVE)

Post treatment

track record, and disseminating information, which will leadto trust in our Group. We believe that developing this way

Lastly, what is your message to shareholders,investors, and other stakeholders?

of thinking will contribute to the sustainable growth of theworld as a whole and lead to the realization of sustainablegrowth as a company. As such, we are positioning three

With the spread of the novel coronavirus, drinking
water (water supply) and sanitation (sewage) are beingof the Sustainable Development Goals (SDGs), which are
advocated by the United Nations, as priority areas.
One specific initiative is the development of a membrane
Ozone treatment
equipment*1

Batch-type sewage
treatment devices

Air diffusion andagitator equipment

Aerobic granularsludge treatment devices(AquaNereda®)

Cloth Media Filter*2

Ceramic membrane
filtration system*1

Companies with core technology
AAS

FUCHS

Wigen

of customer needs by mainly using our strength in filtration
technology to handle advanced water treatment processes
such as reclaimed wastewater. Although the United States
is a large market with 40 billion dollars in annual watersupply and sewage related investment and has numerous
competitors, many of their facilities are aging and there isgreat potential for the Group’s equipment and facilities to beinstalled. We will work to achieve steady growth with AAS
as a base, and through Wigen we will devise new growthstrategies to build a foundation for the field of reclaimed
drinking water.
In Europe, the market is expanding due to population growth,

Microfiltration membrane /Ultrafiltration membrane +Reverse osmosis membrane
filtration system

Ion exchanger

LED UV
irradiation equipment*1: In North America, the ozone and ceramic membrane businesses were transferred to AAS*2: In Europe, sold by Mecana Umwelttechnik GmbH (MECANA)

Overseas, there are several major companies that offer acomprehensive range of services, from water infrastructure
facilities to operation services. Chinese and South Korean
companies are also expanding their businesses, taking
advantage of their low-costs. The Group, however, aims to
expand business by emphasizing the “Remove strategy” and“Deep Technology”, while ultimately aiming for businessexpansion in the unique direction of “strong and flexible
comprehensive social infrastructure”, which is somethingthat can only be achieved by Japan, having experienced theGreat East Japan Earthquake.

and environmental regulations are being tightened, requiring
more advanced water treatment process than ever before.

What is METAWATER’s approach to the SDGs
advocated by the United Nations?

The Group will further strengthen our collaboration withpartner companies, led by Mecana Umwelttechnik GmbH
(MECANA), a subsidiary of AAS, and the newly added
FUCHS, in order to expand the applications of our proprietary

In Japan, there is a saying, “Sanpoyoshi (Good for the buyer,
good for the seller, good for society)”. It means that not only

technologies such as ceramic membranes and cloth media
filters. Demand for water supply and sewage systems is
also increasing in Asia and other regions. We are promoting
initiatives related to infrastructure development projects
in Asian countries utilizing ODA (Official Development
Assistance).

is the buyer and seller happy, but society (the whole world)
is happy as well. At the METAWATER Group, we consider
CSR to be a modern version of “Sanpoyoshi”.

filtration system called the “CPCM (Container Package
Ceramic Mobile)”, which is packaged with our ceramic
membrane.
The idea is to make it possible to move water treatment
plants (facilities), which are a part of the social
infrastructure, like the Marunouchi Line trains that wereonce active in Tokyo and are now active in emerging
countries. As one measure against the frequent occurrenceof natural disasters in recent years, CPCMs will be
introduced in medium and large cities, and later, they will be
used as normal water treatment facilities in small cities andemerging countries. We are proposing sustainable social
infrastructure through large loops such as this.

forward. Contributing to the development of a prosperous
and sustainable society has been and will continue to be our
mission. We have renewed the belief that we must further
focus our efforts on this.
We are also actively engaged in activities aimed at reducing
environmental impacts and contributing to local communities
as part of our “ESG”* initiatives. The METAWATER Groupwill continue to cooperate with local governments, local
residents, and our domestic and overseas partners inbusiness operations to contribute to the sustainability ofwater and environmental infrastructure around the world.
We look forward to your continued support.
*Environment, Social, Governance■ SDGs being focused on
Analyst Comment“Expectations for METAWATER”- Becoming a globally attractive company We will strive to achieve the SDGs by ensuring access to clean water andsanitation for all people and creating a community where everyone cancontinue to live with comfort and peace of mind, through partnerships withpartner companies, citizens, local governments, and local companies all
working together.

Senior Analyst, Corporate Research Department,
SBI SECURITIES Co., Ltd.

Yoshiharu Izumi
Water infrastructure is important, and is required by everyone on

Ceramic membrane

We believe that supporting social infrastructure, suchas the water supply, sewage works and waste recycling,
contribute to both our customers and citizens as a whole. I am
confident that every one of our employees is conscious of
CSR, naturally practicing “Sanpoyoshi”, building up a steadyreconsidered as cornerstones of public health. As stated in
Goal 6 of the SDGs, access to “clean water and sanitation”
will become even more important as the world moves

Management and Operations Overview■ Core technologies possessed by AAS, FUCHS, and Wigen

Container Package
Ceramic Mobile (CPCM)

Emergency ceramic
membrane filtration system

Earth. In developed countries, the challenge is to maintain andrenew aging existing facilities without delay. On the other hand,emerging countries face challenges such as expanding water
demand due to population growth and needing to deal with waterpollution. I expect that METAWATER will be able to use the knowhow it has cultivated up to now to solve these problems. For thisreason, I would like for them to become not only a top-class water
infrastructure company in Japan, but a company that attracts
attention from around the world. In this sense, the long-term visionof achieving sales of 200 billion yen in the fiscal year ending March2028 is an important milestone. I will be closely watching whether
they can win orders for large-scale PPP projects and realize mergers
and acquisitions both in Japan and overseas without damaging
their financial base.

15

METAWATER REPORT 2020

METAWATER REPORT 202016

トップメッセージ
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

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
Expansion of domestic PPP business,

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
2019 to FY ending March 2021) to strengthen our corporate structure. For the "Mid-Term Management Plan 2020", we are capturing
Japanese demand for renewal of water and sewage facilities and reinforcing the domestic EPC business, while at the same time

Plant engineering businessoverseas business foundations

steadily increasing a stock business, the O&M business. We are also working to achieve our long-term vision by expanding the domestic
PPP business, which is positioned as a field for growth, and reinforcing and expanding overseas business foundations through regional
and partnership strategies.

Management and Operations Overview

Achieving our long-term vision

200.0"Mid-Term Management Plan 2020"(FY ended March 2019 to FY ending March 2021)

Targets (consolidated)

Changes and targets for sales

Exceeded

100 billion yen

Listing on theFirst Sectionof the TSE

Started reporting
consolidated
financial statements

Units: (billion yen)
Sales in growth areas (consolidated)● Net profit
140 billion
6.2 billion
yen
yen
*
billion● Orders received 130 yen● ROE
10.0％or more
● Operating profit
9 billion
yen● Sales*Revised in the announcement of financial results for the fiscal year ended March 2020

(Dec. 2014)

Sales in basic areas (consolidated)
Non-consolidated sales

112.3
86.1

93.2

93.1

105.5

106.9

92.8

111.7

103.1

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

110.9

117.3

130.0

128.7

(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

2018

2019

April

July

January

June

AugustApril

September

April

OctoberMay

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

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

AAS acquires all shares of FUCHS
Enprotec GmbH (FUCHS)

DecemberJuly

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.

Established investment quotas forventure companies, etc.

March

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

Strengthened strategic alliancewith the Dutch company PWNT

Established METAWATER ResearchInstitute Co., Ltd.

April

Business partnership with PWNT
B.V. (the Netherlands)

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

17

2013

METAWATER REPORT 2020

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

2016
January
Converted Aqua-Aerobic Systems,
Inc. (AAS), a U.S. water treatment
engineering company, into a wholly
owned subsidiary

2020
April
All shares of Wigen Companies,
Inc. (USA) acquired

METAWATER REPORT 202018

トップメッセージ
Performance highlights

Summary of operating results for the fiscal year ended March 2020

Profit andloss■‌ the year ended March 2020, the second year of the “Mid-Term Management Plan 2020”, in additionFor
to contributions from sales of projects with long delivery periods that had already been ordered and

Financial■increases in completed projects of highly profitable construction, we achieved increases in operating
profit, ordinary profit, and net profit after implementing strategic development investments for the future.

Sales composition (FY ended March 2020)

Operating profit / Operating profit margin

Service solution
business

56.4

Plant engineeringbusiness

72.4

billionyen

128.7

billion
yen

Sales

900

1,125
1,031

40

56.2 %

Sales

1,117

10

128.7

54
5.2

63

67

28
5.7

6.1

1,109

1,238
1,173

6

6.4

4

0

0

’16/ 3’17/ 3’18/ 3

1,200

1,359
1,072

’19/ 3’20/ 3

138.6

1,500

1,287

6.5

8

1,424

owners of parent(hundred million yen)
60

40
30

’16/ 3’17/ 3’18/ 3

Total assets(hundred million yen)

1,386

2,000

Total assets’19/ 3’20/ 3

43.1

39.8

0

’20/ 3

1,210

1,209
482

’16/ 3523’17/ 3

119.5

Net assets

1,600’18/ 3’19/ 3

Total assets / Net assets / Capital adequacy ratio
billionyen

1,152’17/ 3

2

150
100

0

400

’16/ 3

3

50

300
0

4

0

300

’20/ 3

4.4

44.6
1,230

44.4
1,326
590

550

’18/ 3’19/ 3

50

2,500

40

2,000

30

1,500

20

1,000

10

500

0

0

1,195
496

’20/ 3yen

231.52151.65107.17’16/ 3’17/ 3’18/ 3

Book value per share(yen)

231.52
199.46

1,853.68’16/ 32,011.42 2,118.02’17/ 3’19/ 3’20/ 3

2,276.07

billionyen

Capital adequacy ratio (%)

41.4

182.95

200

0

800

’19/ 3

250

1

600

’18/ 3

6
5

4.4

3.5

7

(yen)
300

10

600

’17/ 3

39

4.2

28
2.7

Current earnings per share

yen

57

52

47

50

1,200

’16/ 3

5.7

Net profit margin (%)

Current profit attributable to owners of parent

70

900

0

equity ratio remains high.
‌“Current
earnings per share”, which is an indicator for profitability and growth analysis, has been showing
an increasing trend. “Book value per share”, which indicates stability, continues to increase as well.

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

20

Order backlog

1,250

76

2

(hundred million yen)

1,316

82

20

billionyen

Orders received

1,196

100

60

Sales / Orders received

1,200

billionyen

8.2

Operating profit margin (%)

Operating profit

80

43.8 %(hundred million yen)
1,500

Operating profit(hundred million yen)billionyen■‌ acquisition of the Company’s shares held by NGK Insulators, Ltd., and Fuji Electric Co., Ltd., throughThetender offers in November 2019 led to a decline in net assets for the fiscal year ended March 2020, but theManagement and Operations Overview

Highlights of consolidated financial results’18/ 3yen

2,271.67 2,276.07’19/ 3’20/ 3

Consolidated non-financial highlights
Number of employees

Percentage of employees with disabilities

Number of employees taking childcare leave(non-consolidated)*100% rate of returning to work after taking childcare leave

3,082

2.41

people(persons)

（%）

3,500
3,000

2,839

2,889

2,961

2,977

3,082

2,500
2,000
1,500
1,000
500
0

19

’16/ 3’17/ 3METAWATER REPORT 2020

’18/3

’19/ 3’20/ 3(persons)

2.23

2.22

2.36

2.30

2.41

Male

20

1.5

15

1.0

10

0.5

5

’16/ 3’17/ 3’18/ 3’19/ 3’20/ 30

Increase in the number of participants in social contribution activities

people(FY ended March 2016 to FY ended March 2020)(persons)

25

25

2.0

0

Female

30

3.0
2.5

25

%

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

7’16/ 3

5’17/ 37
6
1’18/ 319

8
4’19/ 3

1,000

138

114
1,541

’20/ 3

0

120

1,116

1,147

1,181

1,275

90

63

65

65

70

60
30

500

6

%

Number of social contribution activities (activities)

2,000
1,500

12

Number of participants in social contribution activities’16/ 3’17/ 3’18/ 3’19/ 3’20/ 30

METAWATER REPORT 202020

トップメッセージ
METAWATER business developments

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,

Three business areas

Four businesses

we propose all sorts of optimal solutions, from design and construction to maintenance and management.

Operation and maintenance (O&M) businessWe are contributing to the development of sustainable water and environmental infrastructure by developing
four businesses: “Operation and Maintenance (O&M)”, “Public-Private Partnerships (PPP)”, “Engineering,
Procurement and Construction (EPC)”, and “Overseas operations” across three business areas both inJapan and overseas: “water treatment plants”, “sewage treatment plants”, and “resource recycling facilities”.

Public-private partnership (PPP) businessEngineering, procurement, and construction (EPC) business
Water treatment plants

Sewage treatment plants

Service solution business
Sales

56.4

4.5

5.0

billion yen
year-on-year

Sales

6

billion yen

billion yen
year-on-year

72.4

Operating profit(56.2%)
billion yen

6.8

Operation and maintenance (O&M) business

1,200
30
41

Approx.

Approx.

Number of prefectures where WBC*2
has been delivered

METAWATER REPORT 2020

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

68 projects in total

Ceramic membranes for large-scalewater treatment plants installed

ip
(P
PP
)

h
rs

21

Water and sewage business fields

projects /billion yen
year-on-year

2,000
40
300

Approx.

locationslocationslocations

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

31

0billion yen

Overseas business

prefectures

Public-private partnership (PPP) business*3 Based on the Company's data

3.2

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

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

Engi
nee
ring
, pr
oc
ure
me
n

bu
sin
es
s

Number of domestic bases

people

Oper
atio
na
nd
ma
int
en
an
c

facilities

M)
O&
(
e

s
nes
i
s
bu

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

100

Approx.

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

Number of on-site staff

billion yen
year-on-year

Engineering, procurement, and construction (EPC) business

Operates and maintains facilities and equipment

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

Overseas business

Plant engineering business

Operating profit(43.8%)
billion yen

Resource recycling facilities

Management and Operations Overview

Four businesses and three business fields

bu
sin
ess

as
se
r
e
Ov

Large-scale ozone
generation systems installed

Local bases/Partners

Approx.

Approx.

Approx.

1060
20locationslocationslocations

METAWATER REPORT 202022

トップメッセージ
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●

Reusedwater

Recycling

Supply water

m

Civil
Mechanicalengineering equipment

Electricalequipment

MaintenanceIndividually entrusted to multiple private companies

23

METAWATER REPORT 2020

Overseas sales (consolidated)

METAW
ATER Group

In the domestic market, the METAWATER Group will strengthen partnerships
with complementary companies to promote PPPs 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 each 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

mp

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 rtnpa

200 billion yen
20 %●Rainwater / Domestic wastewaterco

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

Pipeline

Traditional method

Sewage treatment plants

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.

Management and Operations Overview

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 platformand “three centers”
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 is aiming for efficient and sustainable business
operations with our unique ICT platform and “three centers”.

•Training center for

facility operators•Supply center for parts

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

Facility C

A private consortium is entrustedwith comprehensive waterand sewage operations

Facility D

METAWATER REPORT 202024

トップメッセージ
Business highlights

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.

Electrical technology

Water environment controller "ZLS"

Achieving the high level of availability and environmental resistance required forwater environments
We have developed "ZLS", a controller for water environments that supports the
optimization of operation, maintenance, and engineering of ever-more advanced andever-more complicated water and 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 application compatibility and allows for smooth inheritance ofprogram libraries when updating the water environment control system.

*1 Innovative sewage system technology demonstration project sponsored by MLIT

ICT technology

Demonstration research of continued stock management realization system technology ina cloud environment with maintenance data as original sources(FY2018 B-DASH Project)

Supporting the establishment ofeffective stock management amid
the ever-increasing number of aging facilities
We have demonstrated that continuous stock management
can be achieved through an ICT platform and cloud system thatmakes it possible to effectively collect, organize, store, and use
the maintenance 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■ Characteristics of this technology

ZLS

AI / ICTB-DASH Project*1

Cutting-edge technology initiatives

Utilizing cutting-edge technology to respond to an era of population decline,
contributing to securing the labor force and improving safety and productivity

Organization/
StorageCollection

Use

Demonstration coverage
1 Source data collection/organization system

Uniquecode

Use

Cloud server
System registry Library

Achieving effective
and continuous
stock management

Organization/
Storage

Management and Operations Overview

Promoting development of products andsolutions for medium- to long-term growth

Collection
Regularinspection

ReportingSpecialRepair failures Investigationetc

2 Real-time evaluation andvisualization system

3 Performance degradation

simulation

Evaluation items

Current

Facility A
Facility B
Facility C

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

Degradation prediction model, etc.
Degree ofsoundness Past
5

Treatment equipment, etc.

New

4
3

Evaluation of degree of soundness
Preparation of stock
management plan

Present
Futureprojection

Available data

2

Also takes into account factors
1that degrade functionality

Time

1 Source data collection and organization system

Efficiently collect and organize (store) operations and maintenance data centrally in the cloud, regardless of location
constraints

2 Real-time evaluation and visualization system

Using the collected and organized operations and maintenance data, automatically calculate the degree ofsoundness and visualize necessary information for stock management

3 Performance degradation simulation

Create models predicting long-term changes in equipment operating performance and introduce aprobabilistic 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

Demonstration research for advanced treatment technology through ICT and
AI control of single tank nitrification and denitrification process(FY2019 B-DASH Project)

Providing local contribution solutions froma BCP perspective
In order to support the continuation and early recovery of the water andwastewater business in times of disaster and other emergency situations,
we are providing solutions for water supply and sewage infrastructureusing drones deployed at domestic bases and local contribution solutions
from a BCP perspective, with the aim of developing sustainable waterand environmental infrastructure through public-private partnerships.

Image recognition technology using AI
We constructed a system that can detect the equipment and inspection
objects necessary for ensuring safety at construction, operation andmaintenance sites, enclosing them in a frame.

Realizing short HRT advanced processing, reduced energy use, and reduced maintenance burden
A treated water quality equivalent to the A 2O method isachieved 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, the optimal discharge pressure for the blower
is calculated from the required air volume in real-time, andthe discharge power is reduced by controlling the dischargepressure.
Demonstrators: 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

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

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

Anaerobic

Pressure gauge

Aerobic(Anoxic)

Aerobic

Air flow
control valve

Prevent entry into cordoned-off areas■ Characteristics of this technology
1 Realization of short HRT (retention time) through air

Formation of optimal aerobic and anoxic zones in accordance with loads using ICT*2

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

3 Realization of reduced operation adjustment burden by

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

ICT and reduced blowing power through pressure optimization

Water pipe bridge inspection using drones

responding to seasonal fluctuations, etc., using AI*2 NOx and NH4 meters are used in this technology

Ensure safety during night shifts with a single employee

25

METAWATER REPORT 2020

METAWATER REPORT 202026

トップメッセージ
Business highlights

TopicsWater supply technology

Water distribution analysis system

The METAWATER Group aims to be a corporate group that is trusted by citizens, allowing them to entrust us with the water andwastewater business with peace of mind. To this end, the Group is working to improve corporate awareness, promote branding,Supporting rapid decision-making (BCP) for efficient water operation andstable water supply in the event of an accident
Online water pipe network analysis technology can estimate the status of water transition (flow rate, water level, water pressure, etc.) within
the network up to 24 hours in advance, supporting efficient water operation (water distribution plans) and quick decision-making in order toconsider countermeasures in case of an accident. Advanced scenario analysis functionality allows for various simulations and contributes to
BCP support (consideration of operation methods to shorten water outage time, etc.), technology transfer and know-how accumulation, andsystematic inspection and repair planning of pipeline facilities (measures for extending facility life).

Wastewater
analysis server

Information LAN
Monitoring andcontrol system
Control LAN

Real-time operation data forwater and sewage facilities

Water distribution Water distribution
tank
tank

Water treatment plant
Water treatment plant

Water treatment
plant

Water distribution Measurement information(flow rate, water level, water pressure)tank

Water distribution analysis
system structure
ICT technology

Water distribution Water distribution
tank
tank

Accident

Water treatment plant

Water distribution tank Water treatment plant

Normal times

Water distribution tankAfter route switching

In the event of an accident, water can continue to be distributed using
a detour route with appropriate drainage volume and pressure

Correlation monitoring service

Early detection of abnormalities to reduce plant operational risks
As an option of the WBC* wide area monitoring system, signals are captured
from field servers (GSA) installed at each site, and when abnormalities during
plant operation are detected an alarm is issued at an early stage by making
full use of arithmetic operations, comparisons, theoretical operations, etc.
The system can be easily operated by drag and drop to freely create formulas,and frequently used formulas are provided by default, enabling the user toeasily monitor the plant on a PC, thereby reducing plant operational risks.

and proactively disseminate information on the current situation of the water supply and sewerage industry, as well as our ideas,
strengths, and achievements. We believe our business itself will lead to the sustainability of the water and wastewater business inJapan, which is one of the world’s largest, as well as improve our presence in the water and wastewater business.

Communication activities through participation in local events
The METAWATER Group actively participates in
events held at facilities we are in charge of and theirsurrounding areas all throughout Japan, striving tocommunicate with citizens.
In addition to holding quizzes and panel displays
regarding water at local events, we also host social
study tours for local elementary and junior highschool students at our water, sewage, and resource
environment facilities.
Aiming to communicate the importance of thewater and environmental infrastructure that isessential to our daily lives, we are also working withlocal governments and business entities to create
educational facilities, pamphlets, and other in-building
communication tools used in awareness-raising
activities.

Management and Operations Overview

Aiming to become a corporate group
trusted by citizens

Cutting-edge technology

Takizawa Water Treatment Plant

METAWATER Sewerage Science Museum
Aichi (Inazawa City, Aichi Prefecture)
Staff from the Group explain the mechanisms of a water Exhibition at a summer festival held at thetreatment plant through an in-building exhibition
museum(Aizuwakamatsu City, Fukushima Prefecture)

Takizawa Water Treatment Plant

Ofunato City Industrial Festival(Aizuwakamatsu City, Fukushima Prefecture)(Ofunato City, Iwate Prefecture)

Explanation being given on METAWATER’s Exhibition at a local industry PR event held
Ceramic Membrane Filtration System at a local in the city
event held at the water treatment plant

Brand activities through in-train commercials, radio programs, etc.

Correlation monitoring top
screen (image)As part of our efforts to increase corporate awareness and understanding, as well as to increase the value of water and environmental
infrastructure, the METAWATER Group conducts brand activities through radio programs as well as commercials on the train vision.

*Abbreviation for “Water Business Cloud” METAWATER’s unique information and communications technology
for real-time sharing of information and the analysis and utilization of collected information

Operation unit definition screen (image)

Commercials on the train vision, featuring quizzes onwater by the Miss Japan “Angel of Water”
Topics

FY2017 B-DASH Project

Guidelines for “Technology to improve the treatment
capacity of final sedimentation tanks”
In a demonstration study conducted at the Ryoshima Purification Center (Matsumoto City, Nagano
Prefecture) in cooperation with the Japan Sewage Works Agency and Matsumoto City, a filtration
system was installed in the existing final sedimentation tank with the aim of improving the treatment
capacity of the system quantitatively or qualitatively without increasing the number of building frames.
As a result, it was recognized as a technology capable of achieving stable treated water quality
throughout the year and significantly reducing construction costs compared to cases where an
additional final sedimentation tank or where new rapid filtration equipment is installed. In December
2019, the National Institute for Land and Infrastructure Management established Technology
Introduction Guidelines (draft) for this technology.

27

METAWATER REPORT 2020

Filtration cassette
Washing wastewater
Return upstream fromfinal sedimentation part
Reaction tanksludgeWashing blower

Washing air
Sludge collector

Scope of this technology
Washing wastewater pump

We created commercials played on the train vision, by featuring Nanami Nishio,the 2019 Miss Japan “Angel of Water”, who presents quiz questions on water.
The quizzes were created with themes such as “Protecting water resources” andthe “Role of equipment used at water treatment plants”, and were designed togive people an opportunity to think about the importance of water.

Treated water
Filtration part Washing
To disinfectionwastewater facility
tank

Extracted
sludgeFiltration cassette

To commemorate 1,000 episodes of the program“Mizuoto Sketch”, a special one-hour program was produced
The TBS Radio program “Mizuoto Sketch”, which the Group has been offering
since 2015, is a program that introduces the water landscape in various parts ofJapan though narration and the sounds of water. In September 2019, a special onehour program was produced to commemorate 1,000 episodes. We have presented
original radio dramas related to the sound of water and selected masterpieces of
the water landscape introduced in the past to listeners all across Japan.

Actor Jun Kunimura
appeared as a
special guest on
the special programcommemorating 1,000
broadcasts

METAWATER REPORT 202028

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Introduction to business operations
Project Topics

Plant Engineering Division

Business topics Area-wide Sewage Sludge Recycling Project in northern district of Akita Prefecture

Sludge recycling facility begins operation

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 uniquecorporation with expertise in both mechanical and electric technologies. We design and construct eco-friendly
plants incorporating energy-saving, energy-creation technologies, etc. using electric technologies that maximize
our unique mechanical technologies and capabilities. Combining mechanical and electric technologies andproduct development expertise, we develop efficient water treatment plants and sewerage treatment plants,
save energy, and efficiently use resources.
Director, Senior Executive Officer
Executive General Manager of Plant Engineering Division

Noboru Okuda
External view of the sludge recycling facility

With regard to the “Area-wide Sewage Sludge Recycling Project in northern
district of Akita Prefecture”, which was awarded to a group of companies
represented by METAWATER, the sludge recycling facility was completed in
March 2020 and started operation in FY2020.
The facility will continuously process sludge generated in the northern districtof Akita Prefecture and produce recyclable materials from sewage sludge,
body waste, and purification tank sludge generated in daily life. This systemenables the effective use of sludge, which were previously incinerated, andstably produces recyclable materials over a long period of time, utilizing them as
valuable resources.
It is attracting attention as an advanced model that maximizes “business
continuity” and “contribution to the local community”, and contributes to thecreation of a new recycling-oriented society.

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 thegrowing need for consolidation of facilities and sewage 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 coast of the Tohoku region.

Outline of Area-wide Sewage Sludge Recycling Projectin northern district of Akita Prefecture
SDGs
being
promoted

Project name: Area-wide Sewage Sludge Recycling Project in northern district of Akita Prefecture
Project method: DBO method (Design, Build and Operate)*
Project period: [Design/construction] May 26, 2017 (contract date for this project) - March 31, 2020
[Operation and maintenance] April 1, 2020 - March 31, 2040
Address: 1 Naka-kawaguchi, Kawaguchi, Odate, Akita (on the premises of Odate Disposal Center)*Centrally carrying out the design, building, and operation of a facility

Sludge recycling furnace

Implementing leading-edge technologies, including
advanced water-quality improvement technologies, energysaving technologies, and clean energy power generation for
degraded water purification plants and sewage treatment
plants enables stable supplies of safe and clean water ofsufficient quality and capacity through plant construction.

Sewage sludge recycling system
The sewage sludge recycling system makes it possible to effectively use sludge
and municipal waste by recovering recyclable materials without incineration.

Thermal decomposition gas
To incinerationchamber

Recycling furnace

Characteristics

Recyclable
material
recoverydeviceProduction of high-quality recyclable materials is possible
Constructing sustainable plants with downsized technologies
in response to a social environment with falling populations
and super-aging societies

Incombustibles (iron, aluminum, debris, etc.) mixed in with sludge and waste
are separated and removed in the recycling furnace, producing high-quality
recyclable materials without impurities.

Helps to reduce greenhouse gases (CO2)Construction designs in virtual space‌
Developing
technologies and supplying solutions forincreasing sewage inflows due to abnormal weather such as
heavy rainfalls

Future developments
Looking at trends over the next 10 years, we will have to respond to significant
environment changes, expansion of PPP projects, a serious shortage ofengineers and aging facilities, evolution and expansion of IoT and AI, anddevelopment of work-style reforms. To respond to changing social andcustomer needs driven by these changes in the business environment, the Plant
Engineering Division will pursue optimal design, procurement, and construction
through engineering reforms and the rationalization and streamlining ofoperations, bringing about new value and thus contributing to achieving asustainable society.

29

METAWATER REPORT 2020

Management and Operations Overview

We will bring new value and contribute to achievinga sustainable society.

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

Since sludge and waste are recycled using their own energy, the amount ofauxiliary fuel used is small, and the use of recyclable materials as a substitutefor fossil fuel also contributes to the reduction of carbon dioxide emissions.

Equipment can be started and stopped safely and easily,
and intermittent operation is simple
The heat retention offered by sand shortens the start-up time of theequipment and facilitates intermittent operation. In addition, starting andstopping are safe because the amount of treated materials (combustible
material) retained in the recycling furnace is small.

Treated material supply
Treated material iscontinuously supplied to
the recycling furnace
little by little.

Recyclable material
recoverySewage sludge,
municipal waste, etc.

The powdered recyclable
material and thermal
decomposition gas aredecomposed throughcentrifugal force, andthe recyclable material
is recovered from thebottom of the recovery
device.

Agitation
Treated material andfluidized sand arestirred inside thefurnace.

Heated air

Noncombustible
materials

Debris, etc.

Iron

Recyclable material

Aluminum(In the case of municipal waste)

Use of recyclable materials

They are used as a substitute for fossil fuels such as coal and coke in steelworks,
thermal power plants, and cement plants. They can also be used as a soil conditioner
thanks to their adsorption effect due to the porosity of the recyclable material.

Recyclable materials
produced from sludge

METAWATER REPORT 202030

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Introduction to business operations

Service Solution Division

Project Topics

The Service Solution Division is engaged in business activities that include inspection, repair, operation, and maintenanceof 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 and equipment, there are highexpectations of private companies when local governments are experiencing financial squeezes and there areshortages 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 mechanicaland electric equipment, we visit them immediately to provide support.
Senior Executive Officer
Executive General Manager of Service Solution Division

Recyclables intermediate processing facility●We‌ provide wide-area administration services for facilities, based on the
Water Business Cloud (WBC) using IoT and cloud computing technology, andregistry services for equipment and devices to support asset management.

●We‌ are continuously proposing service technologies that lead to maintaining
and improving safety and quality, as well as optimization such as energy
saving measures, automation, and full-automation, through the introductionof cutting-edge technologies such as AI and ICT.

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

SDGs
being
promoted‌Contributing
to generating and supplying safe and cleanwater by maintaining the functions of clean water treatment
equipment and devices

Contributing to stable operations by maintaining thefunctions of sewage treatment equipment and devices(maintenance of discharged water quality)

In the future, in addition to conventional maintenance services, we willcontinue to provide new services including a variety of outsourced services
related to stock and asset management, along with expanding PPP projects.
We are also strengthening partnerships with local companies and local
governments, as well as actively promoting proposals for profit sharing, inwhich profits from the sale of recyclable materials generated in the wastesorting process are shared with local governments, and proposals for basic
facility improvement projects that extend the life of aging waste treatment
facilities without closing them.
FY2020 began in the midst of a national crisis caused by the spread of thenovel coronavirus, and we were once again convinced of the importance of
maintaining a stable infrastructure, including water supply, sewage works, andwaste treatment. We will work to ensure our various services and technologies
can play an important role in supporting these efforts.

METAWATER REPORT 2020

Sorting work

With our resource environment business, we design, build, operate, and maintainrecycling facilities that sort and recycle waste into usable resources. With this project,
it would be difficult to achieve the intended purpose of the installation by just designingand constructing the facility. Close cooperation with operation and maintenance tasks
is necessary to enhance the operational effectiveness of facilities to be delivered. This
is why, in the design and construction phase, we draw up a rational facility designand construction plan that reflects our extensive experience in delivery, operation, andmaintenance. In the operation and maintenance phase, we utilize our design knowhow to conduct stable and efficient daily operation and maintenance. We are also
contributing to the long-term stable operation of the recycling facility by improving
equipment in cooperation with the design and construction departments in response
to social demands such as changes in waste properties, CO2 reduction measures,
extending the life of the facility, and disaster countermeasures.
This “Kodaira, Murayama, Yamato Hygiene Association recyclables intermediate
processing facility”, which we have been involved with from the design and construction
phase, is a joint project between the three cities of Kodaira, Higashiyamato, andMusashimurayama. The purpose of the facility is to sort, compress, bale, and store PET
bottles and plastic containers and packaging for recycling. The facility is located on asmall site in an urban area and required manual sorting work. Therefore, we proposedand delivered a new type of “gravity separator for plastics” to reduce space and labor,
and started its operation in May 2019. It has been highly evaluated for its ability to
reduce the number of workers and workload required in manual sorting for municipal
projects where job creation is required but it is difficult to secure a sufficient number ofworkers. At present, we are in charge of the operation and management of the facility,
and through this project, we will support the three cities to continue safe, secure, andstable waste treatment, making a recycling-oriented community.

Outline of operation and management of recyclables
intermediate processing facility commissioned by
Kodaira, Murayama, Yamato Hygiene Association

Facility name: K odaira, Murayama, Yamato Hygiene Association Recyclables
Intermediate Processing Facility
Facility nickname: Eco Plaza Three Harmony
Address: 2-122-2 Sakuragaoka, Higashiyamato-shi, Tokyo

Sharing information through tablets

Future developments

31

Operation management of a core facility for
wide-area resource recycling business spanning three cities

Makoto Shimizu

Major activities

Operation and maintenance using ICT

Business topics Operation and management of recyclables intermediate processing facility commissioned by
Kodaira, Murayama, Yamato Hygiene Association

Management and Operations Overview

We will continue to create and offer new services that contribute to thestability and sustainability of water and environmental infrastructure.

Supporting innovations and energy-saving maintenance
operations by offering new technologies and new services,such as automated unmanned operation

Newly introduced gravity separator for plastics reduces the burden on workers in the manual sorting process
Gravity separator for plastics

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
with local companies

In order to reuse plastic waste, it is necessary to remove sand, metal, and other foreign
substances before sorting in accordance with the collection quality guidelines establishedby the Japan Containers and Packaging Recycling Association. We developed thegravity separator for plastics by applying technologies used in the wind separator forincombustibles, for which we have proven delivery records, and have started operationof the first unit. This machine can separate plastics into heavy and lightweight types
with high accuracy before manual sorting work, reducing the workload during themanual sorting process and improving sorting accuracy. It has been highly evaluated in
the situation where it is difficult to secure a sufficient number of workers. Additionally,
downsizing and weight reduction of the equipment makes it possible to constructfacilities in smaller premises and also contributes to reducing construction costs. By using
this machine as one of the differentiating technologies for our resource recycling projects,
we will expand our resource environment and service solution businesses.

Gravity separator for plastics

METAWATER REPORT 202032

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Introduction to business operations

International Business Division

New Partners

The International Business Division aims to develop business focusing on providing METAWATER’s unique and differentiatedproducts and technologies, especially our filtration technology, to countries all around the world, including Asia, where
further 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 localizationof bases 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 thedevelopment of the water environment in various regions all throughout the world, as well as to SDGs from theviewpoints of improving sanitary conditions, creating a comfortable place to live, and fighting global warming.
Executive Officer
Executive General Manager of International Business Division

Ken Akikawa

Business topics Expanding the METAWATER Group through M&A

FUCHS Enprotec GmbH

Wigen Companies, Inc.

In May 2019, the Group company Aqua-Aerobic Systems, Inc. (AAS)
acquired all shares of the German water treatment equipment
supplier FUCHS Enprotec GmbH (FUCHS).
FUCHS provides machinery and technologies related to wastewater
treatment, sewage sludge and exhaust gas treatment, and has
installed more than 3,500 aerators, mixers, and odor control systems
in approximately 60 countries.
Rood Wit Blauw
We will work to further expand our
PWNT Holding B.V.
wastewater treatment business by
BerlinNetherlands
strengthening our ability to provide
Bonnproducts to customers around theFrankfurt
FUCHS Enprotec GmbHworld.

In April 2020, we acquired all shares of Wigen Companies, Inc.
(Wigen), a U.S. supplier of water treatment equipment, through
METAWATER USA, INC., a U.S. subsidiary of our company. Wigen,which specializes in membrane filtration and ion exchange
technologies for water supplies, private use, and reclaimed
wastewater, is operating its business primarily in North America.
Through this, we will enhance our
Wigen
METAWATER
presence in the rapidly growing
Companies, Inc. USA, INC.
potable water reuse market in the
Chicagosouthwestern United States andWashington D.C.
strengthen and expand our North
Aqua-Aerobic
American business by leveraging
Systems, Inc.
synergies with AAS.

FranceMunich™

Management and Operations Overview

We will contribute to solving the world’s water environmental issues
by continuously and thoroughly adhering to localism.

Major activities
●

●

●

●

‌‌In North America, Aqua-Aerobic Systems, Inc. (AAS), which became partof our Group in 2016, is deploying differentiated technologies with animpressive presence, such as a Sequencing Batch Reactor, a Cloth Media
Filter, and the Aerobic Granule Sludge Technology (Aqua Nereda ®). The
company has a stable revenue base with a sales network covering the entire
United States. Additionally, we are also developing our own water treatment
technologies, ozone generation systems, and Ceramic Membrane Filtration
Systems with AAS at the core. Wigen Companies, Inc. also joined our Groupin April 2020, making it possible to support more advanced water treatment
processes using ion exchange technologies and membrane filtration
technologies such as reverse osmosis. Our first step is to increase ourpresence in the potable water reuse market, primarily in the southwestern
United States.
®

‌‌In Europe, we are expanding the CeraMac system worldwide using ourceramic membranes together with the Dutch company PWNT. Based on
the results we receive regarding introduction of this technology to water
treatment plants in the Netherlands, UK, 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 plant of an Advanced Energy Saving
Wastewater Treatment System, which has been certificated by Japan
Sewage Works Agency, succeeding in localizing technology for emerging
countries. Through representative offices in Hanoi, Phnom Penh, andSingapore, we will focus on gathering information in Southeast Asian
countries with the aim of expanding our business in the growing market
of Asia.
In‌ other news, we sold a total of 25 Mobile Ceramic Membrane Filtration
Equipment in six African countries and Southeast Asia. Additionally, we havebeen contributing to the development of local communities, receiving a letterof thanks from the government of Myanmar regarding use of this system intimes of flooding. In 2019, we also received an order for a filtration system tobe carried by a helicopter and are aiming to expand sales in the future.

SDGs
being
promoted
FUCHS OXYSTAR Aerator

Sale of sewage treatment systems, potable water reusesystems, and water purification systems in North America

Development of ceramic membrane filtration technology incooperation with overseas companies

METAWATER REPORT 2020

Company name: FUCHS Enprotec GmbH
Location: Mayen, Rhineland-Palatinate, Germany
Establishment: 1974
President and CEO: Christian D. Henrich
Main business activities:	Development, design, and manufacture of air diffusers and agitators for
wastewater treatment

Company name: Wigen Companies, Inc.
Location: Minnesota, USA (near Minneapolis)
Establishment: 1965
Director and Chairman: Ken Akikawa
President and CEO: Jeff W. Wigen
Main business activities:
Development, design, and manufacture of water treatment equipment suchas for membrane treatment and ion exchange systems

Project Topics
Choa Chu Kang Water Treatment Plant, Singapore

Started operation of the world’s largest water treatment plant using ceramic membrane

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

To further accelerate localization, we will 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 our technology and experience. We will continue
to contribute to the realization of a sustainable society by quickly detecting changes in the ever-changing global water environment and providing solutions.

Ion exchanger

Overview of Wigen Companies, Inc.

Business topics
Expanding sales of Mobile Ceramic Membrane Filtration
Equipment

Reverse osmosis membrane
filtration system

Overview of FUCHS Enprotec GmbH

Implementing Advanced Energy Saving Wastewater Treatment
Systems in Asia

Future developments

33

Air diffusion and agitation with
FUCHS products

Delivered ceramic membrane (CeraMac®)

Overview of Choa Chu Kang Water
Treatment Plant, Singapore
Treatment capacity: 180,000 m3/day
Commemoration ceremony held on August 29, 2019

Our ceramic membrane (CeraMac®) was adopted for the first time in Singapore at the Choa Chu
Kang Water Treatment Plant, which began operating in August 2019. PWNT, a partner company in
the Netherlands, conducted a verification test of the ceramic membrane in collaboration with PUB*
at the water treatment plant for a year and a half from 2011. The results showed that the ceramic
membrane was highly evaluated for its stable membrane filtration performance and excellent
water recovery rate, and the system was finally approved and put into operation. The introductionof ceramic membrane filtration technology is expected to improve the treatment of the tap watersupplied to household, commercial, and industrial sectors, and to address the effects of rapid
urbanization of catchment areas and climate change on
raw water quality in Singapore.
We will continue to develop water treatment
technologies using ceramic membranes and contributeto solving water issues in various parts of the world.
*PUB: Public Utilities Board of Singapore

Commemoration ceremony

METAWATER REPORT 202034

トップメッセージ
Introduction to business operations

PPP Division

Project Topics

The Public Private Partnership Division promotes PPP projects in the Japanese water and sewage market. At a time where weface a declining population, degradation of facilities and equipment constructed during a period of high economic growth,and major earthquakes and torrential rains, here in Japan we need to take early measures to resolve a string of issues
including financial difficulties and a lack of engineers in local governments operating water supply and sewerage projects.
Since the implementation of the PFI Act in 1999, public infrastructure developments have been carried out throughPPP using the capital, technologies, and know-how of the private sector. Furthermore, since the revision of the Water
Supply Act in 2018, with the promotion of large-scale concessions, the demand for PPP using private companies is
expected to increase even further.
Executive Officer and Executive General Manager of
PPP DivisionWe‌ 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. Whenlaunched, this consigned project was the first in Japan to provide comprehensive.

●I‌n 2015, we participated in a project related to a third-sector 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 as well as wider area management projects.

●In‌ Nakatsugawa City, Gifu Prefecture, the scope of water supply services
and other comprehensive consignment operations has been expanded.
Furthermore, we are beginning to see the results of collaborations with local
companies and have been entrusted with a new comprehensive consignment
operation in Gero City, which is adjacent to Nakatsugawa City.

●In‌ Fukuchiyama City, Kyoto Prefecture, we are accelerating initiatives for publicprivate partnership projects, such as by taking on newly entrusted comprehensive
water supply consignment work in collaboration with local companies.

An advanced water supply comprehensive consignment
project implementing “WOODAP”

Masashi Sakai
Arao City Enterprise Bureau

Major activities●

Business topics Comprehensive consignment for Arao water business

SDGs
being
promoted

Outline of the comprehensive consignment for Arao water business
BCP training session‌Activities
ranging from design and construction to operationand maintenance of water treatment plants, including
mechanical and electric equipment.

Comprehensive consignment of the water supply business in Fukuchiyama City,
including counter services and operation management of water supply facilities

BCP training held in Arao City
Cutting tape at the opening ceremony in April 2019

Future developments
Amidst increasingly expanding business areas that are expected to be covered by the private sector, we have positioned the PPP business as a growth area
and are seeing progress in formulating a new business platform targeting privatization and wider area management in the water and wastewater business.
We have already participated in more than 30 PPP projects. In the future, we will promote the following three measures: (1) creating projects making use ofa proposal system under the PFI Act; (2) improving efficiency and developing tools such as asset management tools using ICT; and (3) promoting alliances andpartnerships to respond to wider area management and further comprehensiveness. We will steadily expand our business and enhance our competitivenessto win large-scale projects.

METAWATER REPORT 2020

Project name: Comprehensive consignment for Arao water business
Project period: April 1, 2016 to March 31, 2021
Business operations covered: (1) Administrative and planning support; (2) Management
support; (3) Sales; (4) Design and construction; (5) Maintenanceand inspection; (6) Crisis management

Business topics Comprehensive outsourcing of privately contracted services, including water supply services, in Fukuchiyama City
We propose appropriate solutions tailored to local government
issues, such as the transfer of technology and financial
deterioration in the water and sewage business. A number of ourunique value-added services for PPP projects are also proposed.

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

35

Since FY2016, our Group has been working on comprehensive outsourcing of thewater supply business in Arao City, Kumamoto Prefecture. While the Arao CityEnterprise Bureau has the authority to manage business plans and finances, thewide-ranging water supply business is comprehensively entrusted to a special
purpose company, “Arao Water Service Co.”, of which our company is a leading
company. Now in its fifth year, we are deepening our operational efforts. In
particular, our original methodology, “WOODAP”, was developed in this businessin a practical manner, and established.
Specific measures include “More efficient on-site judgments by assigning head
office employees with decision-making authority to Arao Water Service Co.”,“Practical BCP training for rapid business recovery from disasters”, and the“‘Wani No Kando’ campaign in which employees think about their work from theviewpoint of water users”.
Thanks to these efforts, streamlining and rationalization have resulted in a “9%reduction in work hours (compared to the first year)”, a “40% decrease in longterm delinquency in water charges (stricter closure rules)”, and more.
As the number of PPP projects is expected to increase, we will continue to use
WOODAP methods to provide and improve services from the user’s perspective.

Management and Operations Overview

We are making progress in building a new business platform. We will
steadily expand our business and enhance our competitiveness.

Since April 2019, a consortium of companies represented by METAWATER has
been entrusted with the water supply business in Fukuchiyama City, Kyoto
Prefecture. The scope of the contract includes business operations such as
maintenance, sales, management, administration and planning, as well associal contribution activities. We have entrusted repair work for pipe leaks,
which requires a quick response, to a company affiliated with a local pipe works
association, and oversee a total of 54 operations, including placing orders tospecialized companies.
As a representative company of the consortium, we will utilize our abundance ofbusiness experience to ensure the sustainability of the water supply business andto improve citizen services in Fukuchiyama City.

Outline of comprehensive outsourcing of privately contracted services, including water supply services, in Fukuchiyama City
Project name: C omprehensive outsourcing of privately contracted services,
including water supply services, in Fukuchiyama City
Trustees: METAWATER / METAWATER SERVICE / FUTUREINN Consortium
Contract period: April 1, 2019 to March 31, 2024

Business operations covered: Maintenance and inspections, sales, administrative tasks, management andplanning, facility maintenance and management, unplanned repairs, customer
counter/meter reading/fee-related operations, fee system construction
management, social contribution activities, etc.

METAWATER REPORT 202036

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METAWATER Group’s ESG

Environment

S

Aiming at sustainable growth
Major activities

SocialMETAWATER Group’s ESG activities

Based on a vibrant corporate culture, the METAWATER Group believes that its responsibility is to remain a fair

GovernanceImportant themes

and sincere company as a good corporate citizen, contributing to the sustainable development of society andthe global environment through its business activities.

Gof corporate value

To that end, we are working to solve social issues related to ESG (Environment/Social/Governance) byidentifying the important issues from the perspective of the SDGs based on the expectations of our
stakeholders and changes in social and business environments.
Reaffirming the importance of our mission as a company whose business is focused on the water and

E

METAWATER’s major initiatives
Water-supply area

Natural resources● Water treatment systems reduce river and sea pollution in wet weather

Sewage area

Environment
Climate change

the sustainable growth of society.

Waste recycling facility

Vibrant
corporate climate

S“People are
our greatest asset”
QualitySocial
P.45

Partnerships

Basic CSR
CSR through business activities

Contribution to society andthe earth through water andthe environment
Sustainable development of society
and the global environment

Social contribution

G

GovernanceCorporate GovernanceRisk management

Compliance● 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,

and promoting diversity● Health and safety management so that employees can work happily andenthusiastically● Ensuring the quality of products and services provided● Strengthening relationships with partner companies and promoting CSR procurement● Community contribution and environmental conservation activities in cooperation

with local governments, environmental awareness activities for the next generationof children, international support, and disaster recovery and reconstruction support● Water source forest preservation and environmental conservation efforts●

Assuring management transparency●

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

P.55

Identifying important issues (materiality)from the perspective of SDGs

● Wastewater sludge fuel system that converts waste into fuel

METAWATER Group’s ESG

Our offices

CSR proposed by
METAWATER Group● No. 1 market share for diffuser equipment, with significantly

reduced power consumption

P.39

environmental lifelines, we will strive to ensure that we earnestly do what is needed in order to contribute to● Ceramic Membrane Filtration System reduces waste and saves energy

Strengthening Business Continuity Management (BCM) activities● Implementation of internal controls

We have positioned Goal 6 of the SDGs as our top-priority materiality, while also aiming to achieve Goal
11 through strategic promotion of Goal 17.
TopicsMobile water treatment plants useful in times of disaster

Development of an emergency water treatment system

Goal 6 of the SDGs is an essential materiality to maintain social activities, and for humans to live safely
and with dignity. The METAWATER Group believes that achieving Goal 6 can lead to other issues being

METAWATER has developed an emergency water treatment system that can contributeto people in affected areas in the event of a disaster such as an earthquake, storm,or flood, and we are promoting initiatives to lend them to local governments free ofcharge. Based on experience from past disasters, this system incorporates a number ofinnovations to ensure effective operation in the affected area. These include the use ofa ceramic membrane that can be stored in a dry state for quick use, the use of a dolly
to separate the system so that it can be moved manually, the ability to flexibly change
specifications depending on the water quality of the water source and the installation
location of the system, and the ability for it to be used with commercial power sources.
Through initiatives leveraging our company’s strengths such as these, METAWATER
will continue to contribute to local communities.

Emergency water treatment system (during a demonstration)

solved as well.

37

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METAWATER REPORT 2020

38

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Environment

トップメッセージ

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 country and region. In recent years, environmental destruction

Water treatment technology
Water intake
facilitycaused by plastic waste has also become a major problem.
Beginning from the era of our founding companies NGK Insulators,
Ltd. and Fuji Electric Co., Ltd., the METAWATER Group has beenRivercompanies. Since then, changes in the natural environment havebeen intensifying and accelerating, including global warming, climatechange, and frequent wind and flood damage.
As a company supporting water and environmental infrastructure,
the METAWATER Group will continue to focus on the technologicaldevelopment required by the times.

Chemicalmixing tank

Sedimentation
tank

Adjust waterMix in flocculant
level and volume

Sink and separate
lump sand and soil

Sterilize

Store purified
waterStore water tosend to homes

Advanced wastewater
treatment equipment

Filtration
tank

Disinfection
systemFiltrate
tank

Water
distribution tankThickening
systemDehydrator

SludgeReduce moisture indischarge sludge discharge

Supplywater

Reuse as horticulturalsoil and cement

To town

Squeeze out
more moisture

Maintenance and operations management for water and sewage facilities

Sewagetreatment plants

Development facility

Filter andclean water

Discharge

Water treatment technology
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 tankGritchamber

Disposalandeffective use

Facilities for productionof fuel from sludge
Incinerate

Sludgedehydration technology
Sludgedehydrator

Digestionequipment

Further compact
Reduces the amountthe moistureof sludge andinto a semi-solid state
extracts biogas

Wastewater

Waste recycling
facilities

SludgeThermal manipulation
technology

To sewage treatment
plant through sewer pipes

Resource
environment technology

Sludgethickener

METAWATER Group’s ESG

engaged in various technological development for over 50 years as acompany supporting water and environmental infrastructure.
We were established in 2008, adopting the genes of both thoseReceivingtankCatch colors and smells

Separation and recycling of plastics,
incombustible materials, etc.

Reduce moisturein sludge

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

2019

First delivery of mobile Ceramic
Membrane Filtration Equipment

First delivery of LED UV disinfection equipment
First delivery of RB flash mixer for water treatment plants

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)

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

Waste recycling
facilities

2018

Ozone technology

Sludge dehydration technology(sewage field)

2017

Development of technologies to respond to climate change and the environment(water supply field)

Sewagetreatment plants

2016

Phosphorus recovery fromincinerator ash (2006)

First delivery of high performance digester mixer
First delivery of post-injection dual-liquid type belt press dehydrator

First delivery of multi-layer fluidized incinerator

First delivery of fluidized carbonizing furnace
Delivery of world's first gasification furnace[FY2011] Energy management system using intensive
solid-liquid separation technology

Resource environment technology

Joint research into circulation-type multi-layer incineration
First delivery of kiln type (external heat) carbonizing furnaceFirst delivery of dual heat source binary generator[FY2013] Innovative wastewater sludge energy conversion system that
optimizes overall dehydration, combustion, and power generation[FY2014] Non-aeration circulationwater treatment technology[FY2019] Advanced treatment technology through ICT and AI
control of single tank nitrification and denitrification process[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*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

First delivery of new countercurrent trommel sorter

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

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.

39

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Environment

トップメッセージ

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 systems discharge simply treated wastewater anduntreated sewage into public waters such as rivers when it rains, which
adversely affects the quality of water and public health. As such, withthe 2004 amendment of the Sewerage Act enforcement order, measures
to improve combined overflows are being promoted throughout thecountry. 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 small filter, which is only
about 7.5 mm. By installing it in the primary sedimentation tank of asewage treatment plant or relay lift station, it can filter out floatable
solids and pollutants such as oil balls and plastics 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)

6,000,000
5,000,000
4,000,000
3,000,000

METAWATER Group’s ESG

Ceramic Membrane Filtration System

2,000,000
1,000,000

800,0000
600,000

2015

2016

2017

2018

2019
(Year)

400,000
200,000
0

Water treatment technology
2015

2016

2017

2018

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

2019(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 even in areas where
there are no skilled engineers. In areas that do not yet have water 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 canmove on its own, it contributes to a reduction in transportation energy.
The system can also be used in the event of a disaster such as anearthquake or heavy rain, thanks to the features of the ceramic
membrane that enables stable filtration of even high turbidity raw
water.

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). Approximately 50%of this is electricity used to treat sewage inside wastewater treatment
plants. When treating wastewater, microorganisms decompose thepollutants in the sewage, and the microorganisms then sink together
with the fine impurities to remove the pollutants. A large amount of air
needs to be blown (diffused) into the wastewater in order to activate themicroorganisms.
METAWATER has developed a system capable of diffusing ultra-fine
air by applying ceramic technology, achieving a high oxygen transfer
efficiency. In addition, by reducing the pressure loss when air is blown,
the amount of power required can be reduced by about 30% compared tothe 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
1,000,000

Mobile Ceramic Membrane Filtration
Equipment

500,000
0

2015

2016

2017

2018

2019
(Year)

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Environment

トップメッセージ

Main environmental technology

Thermal manipulation technology

Activities for reducing environmental burdens
Promoting energy-saving measures

Thermal manipulation technology that converts waste into fuelWastewater sludge fuel system

METAWATER has set a goal of “a 1% reduction compared to the■ Power usage (office)previous year” with regard to office power consumption and is actively
implementing office lighting reduction activities.

4,000(t CO2)

3,777

Various initiatives are being explored to reduce the amount of electricity
off when employees step away from their desk (energy-saving andsecurity measures), and in addition to work-style reforms (introduction ofWastewatersludge fuela 4-day workweek, telecommuting, etc.), there are also "Super Refresh

800

2,223

3,402
2,100

1,866

2,000

1,900

1,742

1,700

As a result, our electricity usage in FY2019 decreased by 5.0% compared0

to the previous year, and CO2 emissions were also reduced by 4.7%.

2015

2016

2018

2017

1,500
2019 (Year)

Promoting paperless work environment and purchasing eco-friendly items

600

Since FY2013, METAWATER has abolished the paper-based distribution of meeting materials at executive meetings, instead shifting to the use

400

of tablets to view materials. This meeting format has already been introduced at other general meetings, as we continue our work to achieve a
200
0

METAWATER Group’s ESG(t /day)

3,582

1,000

lights are turned off.

1,000

2,300

3,644

1,834

Days", where employees are asked to leave at a specific time and all the■ <Delivery results> Treated capacity (cumulative)

3,000

2,187

3,787

CO2 conversion

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

■ Power usage ● CO2 conversion(1,000 kWh)paperless work environment throughout the company. At the same time, we are promoting green purchasing of office supplies, and nearly 100%
2015

2016

2017

2018

of the paper we use internally is certified by the Forest Stewardship Council.

2019(Year)

Initiatives regarding industrial waste
Resource environment technology

Improved plastic sorting efficiency and accuracy

Although the amount of industrial waste generated by our business(by type <within Japan>)

activities (office and domestic construction work) varies depending on theDomestic waste recycling system

type of construction work and the number of projects undertaken each

■ Rubblefiscal year, a certain amount of waste is generated due to the nature of(t) ■ Metal scrap

25,000■ Sludge■ Mixed waste, etc.

■ Waste plastics■ Scrap glass, etc.

■ Wood scrap■ Otherthe business. To fulfill our responsibilities as a producer of waste, we are
20,000strengthening our management of industrial waste processing throughongoing departmental education, working to ensure that industrial waste
is properly disposed of.
In addition, in order to promote the reuse of the industrial waste that has

18,314

17,33015,707
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.
For many years, the METAWATER Group has been developing equipmentthat improves efficiency and accuracy in manual sorting work by utilizing
differences in specific gravity in order to improve the recycling rate ofplastics.
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 FY2019,
approximately 300 of our domestic waste recycling systems have beendelivered.

■ Changes in industrial waste emissions

15,00011,7789,851

10,000been created, we outsource the disposal to industrial waste treatmentcompanies that have recycling facilities. The recycling rate of the

5,000

industrial waste that we primarily create, such as debris, sludge, and■ <Delivery results> Treated capacity (cumulative)

mixed waste, is 95.3%.

0

2015

2016

2017

2018

2019 (Year)(t/5H)

600

450

Promoting the adoption of electronic manifests

300

By selecting companies that support electronic manifests, we are, as a producer of waste, making the status of industrial waste processing
visible, and continually strengthening monitoring through an advance application for the use of a paper-based manifest. Depending on local
conditions, in some cases we had to use a company only handling paper manifests. However, in FY2019, the adoption rate was 97.3%, only a 1.0%

150

decrease from the previous year, allowing us to maintain a similar level of adoption (nationwide adoption rate of electronic manifests: 63%). We
0

2015

2016

2017

2018

will continue working to increase the adoption rate of electronic manifests while paying attention to local conditions.

2019(Year)

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Social

Focus

Aiming to become the best company
at which to work

Work-style reforms are the key to corporate competitiveness
The METAWATER Group has entered its fourth 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 human resources are the key to corporate competitiveness. In order tobecome a company full of active, diverse human resources, we are creating an environment and culture that enables more diverse
work, and where each employee can find what work-style reforms work best for them. In recognizing these various work styles, weare also working to reform awareness of mutual respect.

Under the management policy that "people are our greatest asset",
the METAWATER Group is actively working to achieve a life-workbalance while also respecting all aspects of diversity, from humanrights to employment.
Our Western Japan office, which introduced ABW (Refer to Topics on page 46 for more information regarding ABW)

A "life-work balance"* that allows employees
to choose their working styleCommunication is the key to becoming thecompany people most want to work for

The METAWATER Group is promoting various work-stylereforms, including satellite offices and telecommuting,with the aim of achieving a "life-work balance" that allows
employees to choose a style of work that suits their

The METAWATER Group believes that communication is the
key to becoming the No. 1 company people want to workfor. If the use of satellite offices or telecommuting becomespar t of the natural work environment, conventional

lifestyle.
The relationship between companies and their employees

communications methods will also need to change basedon the fact that people won't be face-to-face at the samehas changed dramatically due to a declining birthrate, aging
population, shortage of human resources, developmentof IT, and a diversification of values regarding lifestyle.
It is amongst these changes that we have removed theworkplace at the same time. As such, we are also focusing
on infrastructure development for that purpose. On theother hand, some people have difficulty using the existing
system depending on the type of job, work environment,

existing concepts of working styles, such as work hours
and locations, creating an environment where employees

etc. To ensure that everyone can work enthusiastically,
we will continue to evolve the existing system throughcan choose a working style that suits them in particular.
We believe this leads to happier and more highly motivatedemployees that see the value in their work.
For example, if employees with small children can takecommunication with our employees, knowing that we will
never stop on a "completed form".
In addition to work-style reforms, we also try to see thingsfrom various other viewpoints, promoting diversity, enhancing

advantage of teleworking to choose where and when towork, we are confident that it will be beneficial not only forability development systems to help employees grow, healthmanagement to support mental and physical health, safety

them, but for their families and the company as well.

management so that employees can work with peace ofmind, etc.

In order to realize a variety of work styles, we have been improving thework environment in terms of hardware, such as through the “Introductionof a telework system”, “establishment of satellite offices”, “four-day
workweeks”, and “implementation of ABW” (Refer to the Topics below for
information on ABW). Flexible working styles that take advantage of thisenvironment are steadily spreading throughout the company. In FY2019, as
an approach toward changing mindsets so that the various environments
we have been developing are taken for granted and used, we conducted a“work-style reform questionnaire” targeting approximately 2,000 employees,
and are now identifying issues and considering new measures.
Since FY2020, we have been working to change the way in which work is
traditionally carried out, reducing fixed working hours by 30 minutes, granting
annual paid leave by the hour, raising the limit on accumulated leave, andrelaxing conditions for leave.
The aim of these reforms is to create opportunities for input outside of work,
allowing each employee to grow as an individual by utilizing the newly
created time, and in turn, growing the company by multiplying that growth.

In addition, as a system for enabling a diverse range of human resources
to play an active role in business, we are improving the working conditions
for employees who are 60 or older in order to create more opportunities forsenior human resources, who will be the volume generation in our company
in the future. Specifically, we plan to gradually implement this improvement
over the next three years starting in FY2021. One issue for our company isa shortage of supervising engineers, and so we are addressing this withregard to the above-mentioned improved working conditions for those 60 andolder. We are raising the pay scale for field supervisors above a certain level
without requiring any additional steps, introducing a “super field supervisor
system” as a measure to secure excellent human resources, and have begun
taking efforts to prepare exceptional field supervisors for General Managerlevel working conditions.

■ Review of the working conditions for

those aged 60 and older
Phased working condition improvement period
At the age of 60
（%）

100

■ Review of working hours and leaves/holidays

Current standard

New standard

Currently

After review

60

Scheduledworking hours

7 hours 45 minutes/day(9:00 to 17:30)

7 hours 15 minutes/day(9:00 to 17:00)

40

Accumulatedleave

Cap: 35 days

Cap: 100 days
Relaxation of acquisition
requirements

New standard

New standard

100%

100%

80

Item

TopicsMETAWATER Group’s ESG

Reforming work styles and creating opportunities
for a diverse range of human resources

60%

70%

80%

20
0

Before reaching mandatory
retirement age

2020

2021

2022

2023

(Year)ABW

ABW (Activity-Based Working) is a system for improving performance by selecting a work place
according to the work content and purpose.
Our company’s Western Japan office, for example, has created an environment where each employee
can choose the most appropriate location to work, such as a cafe-like “communication area” where itis easy to communicate and a “concentration area” which facilitates focusing on work.
Bird’s eye view of METAWATER’s Western Japan office (CG image)*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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Initiatives 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 mostimportant management themes. This is because they are the greatest source of management resources and corporate value.

We promote diversity based on the belief that the abilities of various employees with diverse personalities will lead to thegrowth of the Group. In addition to expanding the system to accommodate a variety of human resources, we are implementing

In accordance with the HR philosophy of "supporting personnel who desire to develop themselves, providing them with
opportunities to develop competency", we are creating a culture of self-learning, building an environment that respects
employee individuality and allows them to effectively develop their abilities and potential autonomously.

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

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

Nomination Optional

Officer training

Ability Development Committee

Presentation of overseas companies

Round-table discussion on women’s health and careers
Common Training Promotion WG

International Staff Development WG

Procurement WG

Sales WG

PPP WG

Service WGConstruction & FE WG

Development WG

New employee
training

Technology & Design WG

Newemployees

Various courses based on specialty

Follow-up
training(2 to 3 years withthe company)

Implementation at each workplace /dispatch to external seminars

Junior employees

Individual WGs ofAbility Development Committee

Mid- to
BP/SP Promotional
senior- leveltraining

Elective training

Manager training
Promotional training

Internal/external group training /correspondence course

General General Manager
Managers
training
Managers

Specialized
Workplace By specialty
by job type

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 at overseas sites (national staff).
We also hold sessions to deepen mutual understanding among overseas Group
companies in order to promote overseas business activities. We introduce thebusiness activities and the culture of each country, fostering a sense of solidarity
as a group. In addition, members of the International Staff Development WG fromJapan participate in the program and use it as an opportunity to improve language
skills and gain an understanding of other cultures.

METAWATER Group’s ESG

Ability development system diagram

Aiming to be a company where various human resources canplay an active role in operations

In this era of 100-year lifespans, physical and mental health management is essential tomaintaining a rich and fulfilling public and private life.
Therefore, we held a round-table discussion with health management center nurses
to learn about women-specific health, symptoms and how to deal with issues, and thepoints of self-care.
In addition, through dialogue between participants in the form of round-table discussions,participants gained tips for women on how to enjoy livelier and more active work.

Round-table discussion on women’s health and careers

Acquisition of “Eruboshi”
Follow-up training for mid-career employees

Company-wide specialized education website

To ensure that mid-career employees firmly take root, we help them confirm
and understand workplace conditions (individual counseling) and conduct
compliance-related education necessary for our company employees (internal
control, human rights awareness, information security, etc.).
Individual counseling helps with mental care for mid-career employees,
who can be prone to stress due to environmental changes.

In 2018, we established the “company-wide specialized education
website”, a compilation of educational materials for all occupationsin the METAWATER Group. All the Group employees now have easy
access to specialized educational materials for each occupation thatwere not centrally managed before, and basic educational materials
that are useful to know.
By “aggregating” and “visualizing” the educational materials on thissite, we plan to enhance its functionality as a “web library”■ Example follow-up training curriculum for mid-career employees
Content

Orientation

Individuals
Secretariat

Mental health courses and individual counselingCounselor

CSR Course II (Antimonopoly Act, National Public Service Ethics Act,
Unfair Competition Prevention Act, Anti-gang Act, Political Funds Control Act)

Compliance Course I (Human Rights Awareness)
Compliance Course II (Act on the Protection of Personal
Information, Information Security)

Basics of our accounting system

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

Secretariat

Breaking the ice

CSR Course I (Internal Control, Social Contribution, ESG)

“Eruboshi (Grade 3)”

Instructor

Self-introduction

Outline of employee invention regulations

In March 2020, the company was recognized as a “Grade 3 Eruboshi company” under
the Minister of Health, Labour and Welfare’s certification system, which is given tocompanies undertaking outstanding efforts to promote women’s participation.
We will continue to work on increasing the ratio of women in the company,raising employee awareness, and improving the working environment to create anenvironment where female employees can further play an active role.

Intellectual Property
Department
CSR Promotion
Department
Legal Department
Personnel and Labor
Department
IT Planning
Department
Financial Planning Office

Front page of the “company-wide specialized education website”

Another initiative for promoting diversity is to create an environment where people
with disabilities can play an active role in the company. Employees with disabilities
are engaged in a wide range of activities, taking up responsibility for various tasks innumerous departments. Every morning, instructors (vocational life instructors for persons
with disabilities) check the health of each member at the morning meeting and during
exercise periods, deciding upon their work assignments for the day by taking theircondition 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
Creating business cards for employees; sorting, collecting, anddistributing internal mail; preparing meeting and training rooms;
lending out projectors and other equipment; managing and sendingout company-wide catalogs; etc.

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

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Safety and hygiene initiatives

We believe that people are our greatest asset, and as such the METAWATER Group has established various support systems forthe mental and physical health of employees and their families. It is our belief that promoting the good health of each employee

The METAWATER Group has established a basic policy for health and safety management. Based on the philosophy, “No one
will get injured or injure others”, our focus is on creating a safe work environment that protects our employees from work-

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

related accidents, illnesses, and traffic accidents.

Health management system

Establishment of local safety and health rules and online guideline education

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.

METAWATER has established “local occupational safety and health guidelines” to be
used as a guide for safety and health rules for local construction and work. Our safety
and health rules are based on the Safety and Health Act, and are compiled into a single
volume that is revised annually in response to legal revisions, etc.
Beginning this fiscal year, we are promoting the online publication of the “guideline
education”, which explains the content of this document. By creating an environment
in which employees can take the necessary courses regardless of time or place inaccordance with a variety of working styles, we aim to ensure the dissemination andsharing of safety and health rules.

Improving health awarenessWith the declining birthrate, aging population, and a shortage of labor, it is becoming
more common throughout the world to continue working regardless of age if there
is an opportunity to play an active role, and health management from an early age
is becoming more important than ever. As such, proper health management from anearly age is becoming more important than ever. METAWATER carries out "healthcare activities" and gives "health advice" with the aim of ensuring that employees
can continue to work healthily and enthusiastically. "Health-care activities" include
various events tailored to employees' occupation, age, physical condition, etc., suchas exercise or meal seminars that can be incorporated into everyday life and healtheducation for specific age groups. In FY2018, approximately 700 people participatedin these activities. Additionally, health management staff travel around the country,
talking one-on-one with employees and giving health advice.

Booklet(A5 size, 313 pages)

When selecting a subject online,
contents are explained via voice
and animation

Implementation of special education on full harness-type fall-arrest system

Giving health advice through personal interviews

Mental health careIIn order to prevent mental health issues from arising, we have e-learning classes such as “line care education” for employees in management
positions and “self-care education” for all employees.
Our work-style reforms also include working to reduce commuting stress and improve “life-work balance”. We will continue to promote various mental
health care initiatives in conjunction with our work-style reforms.

The Order for Enforcement of Industrial Safety and Health Act was revised and enacted in
February 2019, and the name and structural standard of the conventional safety belt waschanged to a “fall-arrest system”. In addition, workers who use full harness-type fall-arrest
systems are required to take special education.
METAWATER also started offering special education for use of full harness-type fallarrest systems for its employees in FY2019. From April to July 2019, a total of 10 seminars
were held at each site, and a total of 214 employees participated. In the practical training
curriculum, participants wore an actual full harness-type fall-arrest system, experienced
hanging and self-rescue, and learned how to properly wear the device, the correct postureand feeling of hanging, and about the need for immediate rescue.
Through this education, we are promoting the proper use of fall-arrest systems and thoroughimplementation of measures to prevent accidents, especially regarding falls and slipping,which account for the largest number of casualties in the construction industry (around 40%).

METAWATER Group’s ESG

Initiatives for promoting better healthAcademic education

Practical training

Training for construction supervisors

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It is necessary for local supervisors of subcontractors engaged in local construction workfor our company to have a wide-ranging understanding of the contents of safety-related
documents and construction manuals. Since FY2018, METAWATER has held training forconstruction supervisors, which, in principal, applies to all local supervisors*, and provides
them with training to learn the above contents and education on local occupational safety andhealth guidelines.This training was traditionally only required for some subcontractors, but wehave turned it into a new program which now applies to all our construction subcontractors.
The aim is to ensure that those working in the field can do so safely and comfortably.
This course focuses on education regarding local occupational safety and health guidelines,
explaining in detail the content of the guidelines, items pointed out in disaster case studies
and during patrols, and details from a legal standpoint.
The local supervisors of relevant construction work must attend the course and are issued
a certificate of completion after finishing.
In FY2019, these seminars were held six times, with 219 participants from 57 companies.
We will continue to work to establish and further enhance this course.

Seminar for subcontractor construction supervisors*Target requirements: Local supervisors for work requiring the appointment of a chief engineer as stipulated by theConstruction Business Act

Examination at the end of the course

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Quality 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 leavecustomers further fulfilled.
Preventing accidents is the most important issue in maintaining quality. Plant risk assessment
education is one of the activities that the Group carries out to achieve this.

Goals
●
●

Zero serious accidents
Continual quality
improvement

Preventing equipment accidents through plant risk assessment education

Promotion of transparent procurement– 107 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 FY2019 was 107.

Business negotiations■

Operation processes for plant construction
Basic design

Detailed design

PRA

PRA

Procurement

Enhancing paperless operations through EDI*
Production

Inspection

Field adjustment
PRA

In order to avoid a worst-case scenario, we conduct PRA case study education for service
department personnel regarding critical facilities that have a significant impact on the
lives of the general public.
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 havea chance to speak with. In addition to gaining an understanding of the necessity of
preventing equipment accidents and discovering that risks and countermeasures areperceived differently by various groups, it is also an opportunity for attendees to takenotice of what skills and knowledge they are lacking through group discussions. As aresult, equipment accidents in target departments have been reduced.
As one measure to prevent a facility accident from becoming more serious, in FY2019 we
provided education on plant “correlation (prediction) monitoring”, which leads to early
detection of such accidents.
We will continue these educational activities in order to maintain and improve quality incooperation with related departments.

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 theenvironment. Introduction of EDI began with development-related and in-house equipment orders, and as of FY2019 approximately 52% 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. Like us, oursuppliers 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 ourenvironmental burden.

METAWATER Group’s ESG

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.

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

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

Promotion of green procurement
PRA education

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 FY2019, the green procurement rate for these items reached approximately 95%. We will continue efforts to improve thegreen procurement rate throughout the entire company.

Legal compliance
Comments from PRA education participants
・It was a good opportunity to understand the systems behind how water treatment plants work.

We actively promote participation in social insurance for construction work, etc. Enrollment in 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.and more.

・Expanding education so that we can grasp when there is a sense of unease with the plant, such as with correlation warnings*, is a good thing.
・I’ll do my best not to cause an accident that could be used as a case study to teach future generations.
・I want to learn from my seniors what actions are important in preventing accidents.
・I will make sure that no facility accidents occur.
*Correlation warning: Correlation means the intimate association of two or more things.
	In a water treatment plant, numerous things are correlated, including the relationship between flow rate and water level,such as “The water level drops when water flows out of a tank”.
A “correlation warning” is issued when it is found that such a correlation is in an unusual state.

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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.

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Social contribution
The METAWATER Group handles "water", anatural resource indispensable for life. As

Support for disaster recovery and restoration

METAWATER's policy on social contribution activities

a water and environmental infrastructurecompany, protecting the water cycle is our
mission. We are promoting social contribution

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

activities so that people from all walks of life
can gain an understanding of the importanceof water and the environment.

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.
●

Forest conservation activities to protect green dams
(water source reforestation)

The METAWATER Group participates in forest conservation activities at six locations
throughout Japan, primarily in Okutama, Tokyo.
For example, 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.

72 cleanup activities in 28 municipalities nationwide

The Group holds cleanup and beautification activities around each of ouroffices and local areas, either monthly or several times throughout the year. In
FY2019, we carried out 72 cleanup activities at 28 locations throughout Japan.
FY2019 cleanup areas

Education / Public education■■ 

Contribution to local community

Donation of funds to Iwaki City, Fukushima Prefecture

The Group sends employees to schools and events to teach children who will lead the next generation about water recirculation andenvironmental conservation through the knowledge and technologies related to our core businesses of water and the environment.

Environment preservation■

In November 2019, we made donations to Miyagi Prefecture, Fukushima Prefecture, Iwaki
City (Fukushima Prefecture), and Nagano Prefecture, which were damaged by Typhoon
No. 19 in October 2019.

Okutama forest

International support / relationships
President Nakamura gives a lecture tointernational students from various countries■ 

Hands-on classes held at world heritage forest

Holding “METAWATER Children’s Water
Classes” at nursery schools■ 

Shirakami-Sanchi (Fujisato, Yamamoto, Akita Prefecture) is a primeval
forest rich in nature, and is registered as a World Natural Heritage Site.
In this forest, every year, we hold an on-site class for elementary school
students, called “Adventures Around the Waters of Shirakami”.
Children enjoyed themselves in the adventure through the local forest whilelearning about water source forests. For lunch they enjoyed nagashi somen
using spring water from Shirakami-Sanchi. At the “Shirakami-Sanchi World
Heritage Conservation Center (Fujisatokan)”, after an explanation on water
recirculation using a model, children made sand filtration systems using aplastic bottle and conducted filtration experiments. Filtration experiments
were also demonstrated using a ceramic membrane from our company.
At the end of the session, the children submitted their impressions and areport. The hands-on lesson was an excellent opportunity to learn about
the role of forests and water while interacting with nature.

At “Hiyori Nursery School” (Kirishima City) and “Solanomachi Hoikuen”(Kagoshima City) in Kagoshima Prefecture, for the first time, we wereinvited to hold classes for nursery school children (3 to 5 years old).
The children were delighted by the appearance of our corporatecharacters “Mae-chan” and “Tah-kun”! In the classes, we talked about
how water is usually used by showing picture cards, and the children
conducted a sand filtration experiment. The children themselves
cooperated with each other to make the sand filtration system for theexperiment by putting sand in plastic bottles. Water mixed with volcanic
ash from Sakurajima in the garden was filtered through the system,and the children’s eyes lit up when clean water came out. It was agood opportunity for both the children and teachers to learn about theimportance of water and how to clean it.

Learning about water source forests while venturing into Shirakami-Sanchi

The children are overjoyed by Mae-chan and Tah-kun’s appearance!

Lecture on water recirculation at the “Shirakami-Sanchi World
Heritage Conservation Center (Fujisatokan)”

A group of three packing sand into a filter

METAWATER Group’s ESG

We act with the aim of contributing to society
and the global environment through bothbusiness and social contribution activities
through the lens of water and the environment.

Donation of support funds for damage caused by
Typhoon No. 19 in 2019

■ 

In August 2019, we co-sponsored “Water and Earth”, a summer seminarfor international students hosted by the National Graduate Institute for
Policy Studies. During the session, President Nakamura gave a lecture
on water infrastructure.

Summer seminar for international students■

Blood donations at two business sites

At the Head Office and Nagoya Branch, the Japanese Red Cross Society
brought a blood donation vehicle and 84 employees participated inblood donation activities.

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Governance

トップメッセージ

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

Corporate governanceCorporate governance organization

Basic concept of corporate governance

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 important decisions related to management and supervises business execution. At the same time, auditors and the Board
of Auditors independent from the Board of Directors audit the status of directors' execution of their duties and the like. For the purpose of

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

strengthening independence, objectivity, and accountability for the function of the Board of Directors related to the nomination of candidates
for directors and auditors, determining renumeration for executive officers and directors, etc., a Nomination and Renumeration Advisory
Committee has been established under the Board of Directors. Furthermore, METAWATER Group has introduced the Executive Officers System
to accelerate management-related decision-making, reinforce functions to monitor business execution, and clarify responsibility. Additionally,a CSR Committee has been arranged as an organization to determine the important activities, systems, organizations, and the like of theGroup to ensure compliance with regulatory requirements and corporate ethics. The position and role of each function are mentioned below.

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

Framework of directors*Only (Supplementary Rule 4-2-1) is the Explain Item in the “Report on
Corporate Governance” (hereafter “CG report”) submitted on June 23, 2020.
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.

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METAWATER REPORT 2020

November 2015

June 2016

47th ordinary general meeting of shareholders●

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)

June 2017

November 2018
November 2018

●
●

●

●

President and Representative Director
Report/Proposal

Appointment/
Dismissal

Board of Auditors Meeting

Audit
Supervision/Appointment/
Removal/Approval

Accounting Auditor
Cooperation

ReportAuditing Office

ApprovalInternal audit

Report/Proposal

Approval

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.

Response to Corporate Governance CodeMETAWATER was listed on the First Section of theTokyo Stock Exchange Market in December 2014. As
the CG Code was established in June 1, 2015, the group
implemented the measures stated on the right. We arecommitted to moving forward with corporate governancealso in future.

Report/Submission

Appointment/
Dismissal/Approval

Business divisions/Group companies

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.

Consultation

Nomination and
Renumeration
Advisory Committee

CSR Committee

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

2

Board of Directors Meeting
Advice/Proposals

Report/submission

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

Appointment/
Dismissal/Approval

Report/Submission

Management Meeting

Approaches to improve corporate governance1

General meeting of shareholders Meeting

METAWATER Group’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.

One independent director (outside director) was added
Held a meeting by independent outside director
“Basic Policy on Corporate Governance” revised in accordancewith partial revision of CG code
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.

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Corporate 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, andappropriately reflect 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

We strive to reflect external points of view inour efforts to improve corporate governanceand further develop our business.
Outside Director

Keiichiro Sueknowledge and insights, as well as experience—— What are your overall impressions regarding
the management of the Board of Directors, state ofdiscussions, etc.?

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

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.

Outside Director

Keiichiro Sue

Kaoru
AizawaFumikoKosao

Kimihiko
UemuraKazuo
Takimoto

57

Independent
Director

Outside Director
Independent
Director

Outside Director
Independent
Director

Outside Auditor
Independent
Director

Outside Auditor
Independent
Director

METAWATER REPORT 2020

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.

—— Please tell us about your role as an Outside
Director.
I was asked to serve as an Outside Director because I was highly
evaluated for my overseas experience, including dealing with WTO
disputes involving legal disputes over trade issues in each country’s
systems and enacting domestic laws when I worked for the Ministryof Economy, Trade and Industry. Since returning to my position as alawyer, I have dealt with a number of domestic and overseas issues,
mainly in the area of personnel and labor relations for both domestic
and foreign companies. Since our company has been aggressively
entering the water supply and sewage business in Europe and theUnited States, I thought that I might be able to use my knowledge on
how to deal with legal issues in Japan and overseas, and decided toaccept the offer of Outside Director.
I believe that the most important aspect of corporate governance isthe attitude of management. Things like “pursuing self-interests”
and a “lack of compliance” are obviously out of the question, but it
is also possible that the internal logic of the company may work todamage the business without anyone even realizing. I believe my role
is to participate in discussions from an external perspective so thatthe company does not fall into such a situation. In studying the water
and wastewater business and industry as a whole, I try to reflect that“outside point of view” in the discussions of the Board of Directors.

Our company was formed as a result of the merger of NGK and Fuji
Electric’s water supply and environment subsidiaries. In terms ofcorporate governance, I feel that the unique tension among the threeparties has been working positively.
However, I believe that this relationship will change as the company
develops, and as we expand our overseas business in anticipationof further globalization, governance will inevitably become moredifficult from the perspective of balance as a group company.
In order for corporate governance to function in this process, it isimportant to gain the understanding of our business activities fromstakeholders and to ensure the transparency of the business. I would
like to gain a complete understanding of our company’s businessactivities and help ensure their transparency.

METAWATER Group’s ESG

Corporate title

Our company’s Board of Directors engage in frank and heateddiscussions on important management decisions. However, nodirector is married to their own views and opinions. Rather, everyone
listens to other opinions and discusses them from a professional
perspective. I feel that these discussions are very productive.
Participating in such discussions can be trying, but it’s an effort
everyone is willing to put in.
Over the past 5 years, we have not only been actively engaged in
PPP projects in Japan, but have also been focusing on expanding ouroverseas business. However, we are still in the midst of this process,and as we move beyond our 10-year anniversary, we will have to
make difficult decisions, including deciding on the direction forfurther development of our business. I would like to improve myself
so that I can more actively participate in such discussions.

—— What are your thoughts on the governance ofthe METAWATER Group?

—— What is necessary for the sustainable improvementof corporate value?
I understand that the core of our company’s business is to play avital role in society, equivalent to the kidneys in a human body. In
order for the business to survive and develop, it is essential for all
employees to have an understanding that “our company underpins
the survival of society” and to be aware of “what is most importantin doing business”. Things such as safety, security, and efficiency
are essential for this purpose, and I believe that we should place
importance on the perspective of contributing to society through ourbusiness.
It is also extremely important to create a comfortable working
environment so that employees can work with a sense of duty or
purpose. I think the company deserves high marks for its active
promotion of human resource strategies and work style reforms.

—— What are your future aspirations as an Outside
Director?
I would like to do what I can to improve corporate governance anddevelop our company’s businesses, which have social significance.

METAWATER REPORT 2020

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トップメッセージ

Management organization (As of end of June 2020)
Directors

Auditors
Yasushi Nakamura Operation execution control

Akira Kato

Shigeru Hatsumata

Kimihiko Uemura Outside Independent

President and Representative Director

Assistance to the Chief Executive Officer
Executive General Manager, Corporate Strategy Planning Division

Audit and Supervisory Board Member

Partner of Midosuji Legal Profession Corporation

April 1981 Joined Fuji Electric Co., Ltd.
April 2008 Director at METAWATER
April 2012 Executive General Manager, Service Solution Division at METAWATER
April 2014	Executive General Manager, Corporate Strategy Planning
Division at METAWATER
June 2015 Senior Executive Officer at METAWATER
June 2016 President and Representative Director at METAWATER (current)
President & Chief Executive Officer at METAWATER (current)
June 2020 Outside Director, NTT Data Intramart Corporation (current)

March 1980 Joined NGK Insulators, Ltd.
June 2013 Director at METAWATER (current)
June 2015 Senior Executive Officer at METAWATER
June 2016 Executive General Manager,
Corporate Strategy Planning Division at METAWATER (current)
Chief of Export Management Office at METAWATER
April 2017 Senior Executive Officer at METAWATER
April 2019 Vice President & Executive Officer at METAWATER (current)

April 1982
April 2008

April 1987

Noboru Okuda

Kenji Yamaguchi

Kazuo Takimoto

Executive General Manager, Plant Engineering Division

Executive General Manager, Business Strategy Division

CPA and Tax Accountant ofTokyo Kudan Accounting Office

April 1982
April 2013

Joined Fuji Electric Co., Ltd.
Deputy Executive General Manager,
Plant Engineering Division at METAWATER
April 2014 Executive General Manager,
Service Solution Division at METAWATER
June 2015 Executive Officer at METAWATER
April 2016 Senior Executive Officer at METAWATER (current)
Executive General Manager, Plant Engineering Division (current)
June 2019 Director at METAWATER (current)

April 1987
April 2013

November 1978 Joined Asahi Accounting Co., Ltd.
October 1988 Opened Takimoto Accounting Office(currently Tokyo Kudan Accounting Office) (current)
June 2007 Outside Director for Vitec Co, Ltd.
June 2014 Outside Auditor at METAWATER (current)

Susumu Sakabe

Motofumi Matsumura

Director of NGK INSULATORS, LTD. Senior Executive Officer

Advisor of Fuji Electric Co., Ltd.

March 1981 Joined NGK Insulators, Ltd.
June 2007 Executive Officer at the company
June 2010 Director & Executive Officer at the company
June 2011 Director & Senior Vice President at the company
June 2014 Outside Director for METAWATER (current)
June 2015 Director & Senior Vice President at NGK Insulators, Ltd. (current)

April 1978
June 2004
April 2008
April 2011
April 2016
June 2016
June 2016

Keiichiro Sue

OutsideIndependent

OutsideJoined Fuji Electric Co., Ltd.
Director at Fuji Electric Systems Co., Ltd.
Executive Managing Director at the company
Executive Officer at Fuji Electric Co., Ltd.
Advisor at the company (current)
Outside Director for METAWATER (current)
Director at Fuji Furukawa Engineering & Construction Co., Ltd.

Kaoru Aizawa

OutsideIndependent Director of Nicca Chemical Co, Ltd.

April 1984

April 1977
April 2003
June 2007
June 2010
June 2011

Fumiko Kosao

OutsideIndependent

Licensed tax accountant, Kosao Fumiko Accountant OfficeOutside Director of CTI Engineering Co., Ltd.
April 1973 Jointed the National Tax Agency
July 2011 Director, Gyoda Tax Office, Kanto-Shinetsu Regional Taxation Bureau
July 2014 Director, Nihonbashi Tax Office, Tokyo Regional Taxation Bureau
August 2015 Registered as a tax accountant
Tax accountant, Fumiko Kosao Certified Tax Accountant Office (current)
June 2016 Outside Auditor for TOBISHIMA CORPORATIONMarch 2017 Outside Director for CTI Engineering Co., Ltd. (current)
June 2017 Outside Director for METAWATER (current)

METAWATER REPORT 2020

Joined Nitto Denko Corporation
Executive Officer at the company
Board Member & Executive Vice President at the company
Board Member & Senior Executive Vice President at the company
Representative Director & Senior Executive Vice President
at the company
September 2014 Advisor at NICCA CHEMICAL CO., LTD.
March 2016 Outside Director at the company (current)
June 2016 Outside Director for METAWATER (current)

Independent

Executive Officers
President & Chief
Executive Officer

Yasushi Nakamura

Operation execution control

Vice President andExecutive Officer

Akira Kato

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 Office and Affiliates Coordination Department, Corporate Strategy Planning Division

Senior Executive Officer

Noboru Okuda

Executive General Manager, Plant Engineering Division / Responsible for Product Center / Responsible for Quality Assurance OfficeSenior Executive Officer

Makoto Shimizu

Executive General Manager, Service Solution Division / President and Representative Director, METAWATER TECH Co., Ltd.

Senior Executive Officer

Masashi Sakai

Executive General Manager, Public Private Partnership Division

Executive Officer

Eiji Nakamura

President and Representative Director, METAWATER SERVICE Co., Ltd.

Executive Officer

Kenji Yamaguchi

Executive General Manager, Business Strategy Division / Responsible for WBC Center

Executive Officer

Michio Fujii

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 / Chief of Export Management Office /Responsible for Risk Management / President and Representative Director, METAWATER Research Institute Co., Ltd.

Executive Officer

Masahiro Takagi

Executive General Manager, Sales and Marketing Division

Executive Officer

Masayuki Nakagawa

Executive General Manager, Financial Planning Office, Corporate Strategy Planning Division /Responsible for Information Technology Planning Department, Corporate Strategy Planning Division

Executive Officer

Yoshito Ezure

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

Executive Officer

Tsugio Kusano

Executive General Manager, Plant Construction Center / Responsible for Safety and Health Management Office

Executive Officer

Susumu Kadowaki

Deputy Executive General Manager, Sales & Marketing Division

Executive Officer

Koichi Yamaguchi

Executive General Manager, Cost Engineering Center

Executive Officer

Ken Akikawa

Executive General Manager, International Business Division /Director and President, METAWATER USA, INC. / Director and Chairman, Wigen Companies, Inc.

Executive Officer

Tatsuo Kato

Deputy Executive General Manager, Plant Engineering Division

Independent

Partner of Blakemore & Mitsuki Law Firm
Registered as an attorney (Daiichi Tokyo Bar Association)
Joined Nobuo Takai Law Office
October 1995 Registered as an attorney in New York state
June 2003 Outside Auditor for Nippon Signal Co., Ltd.
June 2009 Partner at Blakemore & Mitsuki (current)
June 2014 Outside Director for METAWATER (current)
June 2014 External Audit & Supervisory Board Member for NHK Spring Co., Ltd.
June 2015 External Director at the company (current)

59

Joined NGK Insulators, Ltd.
Deputy Executive General Manager,
Business Strategy Division at METAWATER
April 2015 Executive General Manager, Business Strategy Division (current)
June 2015 Executive Officer at METAWATER (current)
June 2019 Director at METAWATER (current)

OutsideRegistered as an attorney (Osaka Bar Association)
Joined Midosuji Law Firm
(currently Midosuji Legal Profession Corporation) (current)
June 2007 Outside Auditor for Fudo Tetra Corporation
June 2013 Outside Auditor at METAWATER (current)

METAWATER Group’s ESG

OutsideJoined Fuji Electric Co., Ltd.
Deputy Executive General Manager,
Business Development Division at METAWATER
April 2014 Deputy Executive General Manager, CSR Division at METAWATER
April 2015 Executive General Manager, CSR Promotion Office at METAWATER
June 2015 Executive Officer at METAWATER
June 2019 Audit and Supervisory Board Member at METAWATER (current)

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Risk management and compliance

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 theiroccurrence or to reduce losses associated with them, while striving to improve and expand the corporate value of the Group.
Furthermore, the Risk Management Working Group has been established within the CSR Committee in an effort to improve and reinforce
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

ReportCSR Committee

Risk Management Sub-Committee
Instruction

Auditing Office

Audit

ReportDivisions/Group companies

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 FY2019 audits, and all of those issues
were corrected, with continuous improvements being made.

Information security is imperative at construction sites

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 areholding individual workshops. Easy-to-understand examples are used to raise awareness andstrengthen information security.

Furthermore, in order to respond to individual risks, in addition to establishing the “METAWATER Business Continuity Plan (BCP)”,“Compliance Rules”, and “Information Security Policies”, we have also established regulations, standards, and manuals forresponding to accidents, the environment, and safety and health, so that we can respond quickly and accurately to various events
that may occur.

METAWATER Group’s ESG

ReportThe utilization of Information and Communications Technology (ICT) is indispensable for promoting work style reforms, improving
operational efficiency and convenience, etc. However, the development of an information society is increasing, and with it

Information security seminar for new graduates

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

BCM activities
With a commitment to strengthening Business Continuation Management (BCM), the
METAWATER Group has developed the Business Continuation Plan (BCP), which is suitablefor its business characteristics.
Furthermore, the Group regularly holds BCM Promotion Working Group meetings in order toimplement and realize. In order to link these to specific action, various internal regulations have been established, ensuring thoroughcompliance with laws and internal rules.

improve the effectiveness of the formulated BCP.
In FY2019, we made major revisions to our BCP, including establishing “emergency priority
operations”, reviewing BCP (recovery action) procedures, and streamlining documentsby consolidating related rules. In FY2020, we plan to further improve effectiveness bypromoting greater permeation and familiarization of the BCP through various training andeducation programs.

BCM Promotion Working Group

Additionally, at the Head Office and Hino Branch, we continue to conduct skill training for our
in-house firefighting teams, which are made up of employees, to familiarize them with various
skills such as emergency calls, cardiopulmonary resuscitation, and fire extinguisher training.
In response to the spread of novel coronavirus infections, we have established an emergency
response division headed by the President and are implementing various measures in a
flexible manner.
In light of our social mission to provide water and environmental infrastructure, all of
METAWATER is working to prevent the spread of infection in order to ensure business

Compliance 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 conducted company-wide education on thethemes of personal information protection, information security, andharassment prevention. In FY2019, 18 seminars were held at five sites,
and a total of 2,570 employees participated over a two year period.

■ FY2019 e-learning and company-wide

education results
Company-wide
education
Training for each department walking through therevisions of the BCP

e-learning
education

Head Office (5 times), Hino (4 times),
Nagoya (3 times), Osaka (3 times), Fukuoka (3 times)
Total of 22,183 people across 8 sessions

continuity and the safety of employees.
61

METAWATER REPORT 2020

METAWATER REPORT 202062

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, 2020.
Operating Results Review for the Current Fiscal Year
During the fiscal year ended March 31, 2020, business conditions of the Japanese economy have recovered moderately,
although some weakness remained. This is due in part to the effects of various government policies amid the improving labormarket and increasing salary levels. The global economy continued to recover moderately as a whole, despite the risks ofuncertainty related to developments in trade issues, the outlook for the Chinese economy and the government policies.
Meanwhile, the global outbreak of COVID-19 has been constraining the economic activity since January 2020, and theeconomy has slowed rapidly.
Under such circumstances, in order to achieve the Midterm Business Plan 2020, covering the period up to FY2020 (fiscal
year ending March 31, 2021), the Group has been trying its 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 ofsustainable 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.
The operating results of the Group for the fiscal year ended March 31, 2020 are as presented in the table below.

Net sales

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

Fiscal year ended
March 31, 2020
(Millions of yen)

Increase/(decrease)(Millions of yen)

Increase/(decrease)(%)

117,342

128,723

11,381

9.7

Operating income

7,607

8,223

615

8.1

Ordinary income

7,624

8,132

508

6.7

Profit attributable to owners of parent

5,170

5,677

506

9.8

123,807125,011

1,204

1.0

Outstanding orders

142,351

138,639(3,711)(2.6)

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.
Operating results by segment are as follows:(Plant Engineering Business)
The operating results of the Plant Engineering Business are as presented in the table below.
In the EPC business, the net sales showed a steady growth, while the operating income remained at the same level year on
year due to the differences in the composition of projects. Both net sales and operating income in the international businessremained approximately at the same level year on year.
Fiscal year ended
March 31, 2019
(Millions of yen)

Fiscal year ended
March 31, 2020
(Millions of yen)

Increase/(decrease)(Millions of yen)

Increase/(decrease)(%)

Net sales

65,51772,366

6,848

10.5

Operating income

3,191

3,188

(3)

(0.1)

Sales orders

73,91567,861(6,053)(8.2)

Outstanding orders

83,04778,542(4,505)(5.4)(Service Solutions Business)
The operating results of the Service Solutions Business are as presented in the table below.
Both net sales and operating income in the O&M business showed a steady growth. Both net sales and operating income in
the PPP business also showed a steady growth.

63
63

METAWATER REPORT2020
METAWATERREPORT
2020

Fiscal year ended
March 31, 2020
(Millions of yen)

Increase/(decrease)(Millions of yen)

Increase/(decrease)(%)

Net sales

51,82456,356

4,532

8.7

Operating income

4,416

5,035

619

14.0

Sales orders

49,89257,150

7,258

14.5

Outstanding orders

59,30360,097793

1.3

Financial Position Review for the Current Fiscal Year
Total assets as of March 31, 2020 decreased by ¥13,151 million compared to March 31, 2019 to ¥119,469 million.
Current assets decreased by ¥13,596 million compared to March 31, 2019 to ¥101,941 million due to a decrease in work inprocess and cash and deposits, offsetting with an increase in accounts receivable - trade. Non-current assets increased by¥444 million compared to March 31, 2019 to ¥17,527 million due to an increase in assets for retirement benefits.
Current liabilities decreased by ¥1,992 million compared to March 31, 2019 to ¥54,333 million due to a decrease in advances
received, offsetting with an increase in accounts payable - trade. Non-current liabilities decreased by ¥1,720 million comparedto March 31, 2019 to ¥15,542 million due to a decrease in PFI and other project finance loans.
Total net assets decreased by ¥9,438 million compared to March 31, 2019 to ¥49,592 million due to a decrease resulting
from purchase of treasury stock.
Cash Flow Review
The balance of cash and cash equivalents (hereinafter the “funds”) as of March 31, 2020 decreased by ¥14,920 million
compared to March 31, 2019 to ¥12,876 million. An analysis of the cash flows for the fiscal year ended March 31, 2020 and
related commentary thereon is presented below:(Cash flows from operating activities)
The funds generated by operating activities was ¥3,521 million (¥2,715 million decrease year to year): ¥8,132 million ofincome before income taxes and ¥1,098 million of depreciation, offsetting with ¥1,859 million increase in notes and accounts
receivable - trade and ¥2,537 million used for payment of income taxes.
(Cash flows from investing activities)
The funds used for investing activities was ¥1,380 million (¥575 million increase year to year): ¥600 million used for purchaseof property, plant and equipment and ¥179 million used for purchase of intangible assets.
(Cash flows from financing activities)
The funds used for financing activities was ¥17,072 million (¥14,455 million increase year to year): ¥1,607 million used for
payment of dividends, ¥844 million used for repayments of PFI and other project finance loans and ¥14,288 million used forpurchase of treasury stock.
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 address three priority issues of “strategic development investment,” “business strategy,”and “efforts of sustainable ESG,” in order to achieve the management targets for FY2020 of sales orders of ¥140.0 billion,
net sales of ¥130.0 billion, and operating income of ¥9.0 billion. The economy has continued to rapidly slowed down since
January 2020, due to the impact of COVID-19. Since the trends going forward are uncertain at present, the impact of COVID19 is not incorporated in the plan for FY2020.

METAWATERREPORT2020
2020
METAWATERREPORT

Financial Information

Sales orders

Fiscal year ended
March 31, 2019
(Millions of yen)64
64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,
2020

As of March 31,
2020

Assets

As of March 31,
2018

As of March 31,
2019

As of March 31,
2020

As of March 31,
2020

Liabilities

Current assets

Current liabilities

Cash and deposits*325,805*3

28,589*3

13,645

125,379

Accounts payable - trade

18,372

18,27819,801

181,944

Notes and accounts receivable - trade*3

72,164*3

76,282*3

78,109717,715

Electronically recorded obligations

8,155

8,380

11,603

106,615

269

337

276

2,536

855

7,856

Work in process

2,623

4,670

3,357

30,846

Short-term loans payable

Supplies

3,299

3,932

4,711

43,287

Current portion of PFI and other projects
finance loans

2,118

19,461

Income taxes payable

2,173

2,419

2,206

20,270101,941

936,699

Advances received

10,71916,075

9,011

82,798

857

1,361

1,340

12,312

204

517

579

5,320

1,508

Other current assets*4

Total current assets

105,401*4

2,062

115,538*4*3

Provision for warranties for completed
construction
Provision for loss on construction
contracts

Non-current assets
Property, plant and equipment

833

*3

844

*3

Buildings and structures, net

1,189

1,300

1,222

11,228Other current liabilities

7,340

8,111

8,658

79,555

Machinery and equipment, net

818

970

1,172

10,769Total current liabilities

48,92756,32654,333499,246

Tools, furniture and fixtures, net

423

462

391

3,592

Construction in progress

235

153

117

1,075

Long-term loans payable

2,050

1,847

1,539

14,141Other property, plant and equipment,
net

315

301

280

2,572

PFI and other projects finance loans

9,849

90,498

3,184

29,256

Liability for retirement benefit

5,294

4,603

4,025

36,984

Other non-current liabilities

88

107

128

1,176

Total non-current liabilities

18,982

17,262

15,542

142,809

67,91073,58969,876642,065

*2

2,982

*2

3,188

*2

Intangible assets

Non-current liabilities*3

11,549*3

10,705*3

Software

890

517

445

4,088

Software in progress

94

29

144

1,323

Goodwill

1,842

1,670

1,671

15,354

Customer-related assets

2,769

2,539

2,506

23,026

Shareholders’ equity

Other intangible assets

1,463

1,314

1,240

11,393

Capital stock

11,946

11,946

11,946

109,767

Total intangible assets

7,060

6,072

6,008

55,205

Capital surplus

15,08015,08015,080138,564Retained earnings

30,21433,83037,900348,249(0)(0)(14,289)(131,296)

57,24160,85650,638465,294

Investments and other assets
Investment securities*1, *4

1,345
224*1, *4

1,342
196*1, *4

Total liabilities
Net assets

1,568

14,407

Treasury stock

173

1,589

Total shareholders’ equity

Long-term loans receivable*4

Guarantee deposits

1,528

1,604

1,561

14,343

Assets for retirement benefits

821

1,374

2,172

19,957

Valuation difference on available-for-salesecurities

54

49

54

496

Deferred tax assets - non-current

3,541

3,268

2,783

25,571

Foreign currency translation adjustment

84

(371)

(366)

(3,363)

47

35

74

679

Remeasurements of defined benefit plans(2,474)(1,645)(882)(8,104)

7,509

7,822

8,333

76,568

Total accumulated other comprehensive
income(2,335)(1,967)(1,194)(10,971)

17,551

17,082

17,527161,049

Non-controlling interests

136

142

148

1,359

122,952

132,620

119,469

1,097,757

Total net assets

55,04259,03149,592455,683

122,952

132,620

119,469

1,097,757

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

Accumulated other comprehensive income

Total liabilities and net assets
METAWATER REPORT2020
METAWATERREPORT
2020

Financial Information

Total property, plant and equipment

65
65

Thousands of
U.S. dollars

Millions of yen

METAWATERREPORT2020
2020
METAWATERREPORT

66
66

Consolidated Statement of Income and Statement of Comprehensive Income[Consolidated Statement of Comprehensive Income][Consolidated Statement of 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

17,224
6,745

Fiscal year ended
March 31, 2020

128,723

1,182,789

101,846

935,826

26,877

246,963

18,653

171,395

8,223

75,558117,342*1

23,970*2, *4

Fiscal year ended
March 31, 2020

91,442*1

25,899*2, *4

18,291
7,607*2, *4Non-operating income:Interest income

193

194

175

1,608

Dividends income

34

56

52

477

Foreign exchange gain

—

152

—

—

Miscellaneous income

17

7

25

229

Total non-operating income

245

410

253

2,324

Non-operating expenses:
217

218

190

1,745

Loss on valuation of investment
securities

—

87

—

—

68

624

Loss on disposal of non-current
assets

66

*3

84

*3

Foreign exchange loss

236

—

59

542

Miscellaneous loss

4

3

25

229

526

394

344

3,160

Ordinary income

6,465

7,624

8,132

74,722

Income before income taxes

6,465

7,624

8,132

74,722

Income taxes - current

2,187

2,526

2,355

21,639

Income taxes - deferred

325

(80)

91

836

Total income taxes

2,513

2,446

2,446

22,475

Net income

3,951

5,178

5,686

52,246

Profit attributable to non-controllinginterests

20

7

8

73

Profit attributable to owners of parent

3,931

5,170

5,677

52,163

Total non-operating expenses

67
67

*3

METAWATER REPORT2020
METAWATERREPORT
2020

Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2020

3,951

5,178

5,686

52,246

Valuation difference on available-forsale securities

21

(4)

4

36

Foreign currency translation
adjustment

(49)

(455)

4

36

Remeasurements of defined benefit
plans

364

828

763

7,010

772

7,093

Net income
Other comprehensive income

Total other comprehensive income
Comprehensive income

*1

336

*1

367

*1

4,287

5,545

6,458

59,340Comprehensive income attributableto owners of parent

4,267

5,538

6,450

59,266Comprehensive income attributable
to non-controlling interests

20

7

8

73

(Details)

Financial Information

Interest expenses

Thousands of
U.S. dollars

Millions of yen

METAWATERREPORT2020
2020
METAWATERREPORT

68
68

Consolidated Statement of Changes in Shareholders’ Equity

Fiscal year ended March 31, 2019

Fiscal year ended March 31, 2020
(Millions of yen)

(Millions of yen)

Shareholders’ equity

Balance at April 1, 2018

Shareholders’ equity

Capital stock

CapitalsurplusRetainedearnings

Treasurystock

11,94615,08030,214(0)

Total
shareholders’equity57,241

Balance at April 1, 2019

Changes during the year

Capital stock

CapitalsurplusRetainedearnings

Treasurystock

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

Changes during the year

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

Dividends from surplus(1,607)(1,607)

Profit attributable to ownersof parent

5,170

5,170

Profit attributable to ownersof parent

5,677

5,677

(0)

Purchase of treasury stock

Purchase of treasury stock(0)

Changes in other equity, net
Total changes during the year
Balance at March 31, 2019

—

—

3,615

(0)

3,614

Total changes during the year

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

Balance at March 31, 2020

(14,288)

—

—

4,070

(14,288)(10,218)

11,94615,08037,900(14,289)

50,638

Accumulated other comprehensive income

Total
Valuation
Foreign currency Remeasurements accumulateddifference onof definedothertranslation
available-for-salebenefit planscomprehensive
adjustment
securities
income54

84(2,474)(2,335)

Noncontrollinginterests

Total net
assets136

55,042

Changes during the year

Total
Valuation
Foreign currency Remeasurements accumulateddifference onof definedothertranslation
available-for-salebenefit planscomprehensive
adjustment
securities
incomeBalance at April 1, 2019

49

(371)

(1,645)(1,967)

Noncontrollinginterests

Total net
assets142

59,031

Changes during the year

Dividends from surplus(1,555)

Dividends from surplus(1,607)

Profit attributable to ownersof parent

5,170

Profit attributable to ownersof parent

5,677

Purchase of treasury stock(0)

Purchase of treasury stock(14,288)

Changes in other equity, net

(4)

(455)

828

367

5

373

Changes in other equity, net

4

4

763

772

6

779

Total changes during the year

(4)

(455)

828

367

5

3,988

Total changes during the year

4

4

763

772

6

(9,438)

Balance at March 31, 2019

49

(371)

(1,645)(1,967)

142

59,031

Balance at March 31, 2020

54

(366)

(882)

(1,194)

148

49,592METAWATER REPORT2020
METAWATERREPORT
2020

METAWATERREPORT2020
2020
METAWATERREPORT

Financial Information

Balance at April 1, 2018(14,288)

Changes in other equity, net

Accumulated other comprehensive income

69
69

Total
shareholders’equity70
70Consolidated Statement of Cash Flows

Fiscal year ended
March 31, 2018

Shareholders’ equity
Capital stock
Balance at April 1, 2019109,767

CapitalsurplusRetainedearnings

Treasurystock

138,564

310,851(0)559,184

Changes during the year
(14,766)

Profit attributable to ownersof parent

52,16352,163Purchase of treasury stock(131,287)(131,287)

Balance at March 31, 2020——

37,397(131,287)(93,889)

109,767

138,564

348,249(131,296)

465,294

Accumulated other comprehensive income
Total
Valuation
Foreign currency Remeasurements accumulateddifference onof definedothertranslation
available-for-salebenefit planscomprehensive
adjustment
securities
income450(3,408)(15,115)(18,074)

Noncontrollinginterests

Total net
assets1,304

542,414

8,132

74,722

Depreciation

1,441

1,348

1,098

10,089

140

138

148

1,359

(349)

(156)

(196)

(1,800)

68

(550)

(631)

(5,798)

(194)

510

(19)

(174)

37

313

61

560

(228)

(250)

(228)

(2,095)Interest expenses

217

218

190

1,745

Foreign exchange (gain)/loss

209

(174)

59

542

66

84

68

624

—

87

—

—

(4,311)(4,165)(1,859)(17,081)

1,292(2,707)

605

5,559

(858)

248

5,169

47,496

2,067

5,361

(7,073)(64,991)

1,496

441

501

4,603

Subtotal

7,562

8,372

6,027

55,379Interest and dividends income
received

228

250

228

2,095

Interest expenses paid

(220)

(220)

(196)

(1,800)

Income taxes paid

(2,394)(2,165)(2,537)(23,311)

Net cash provided by operating
activities

Dividends from surplus(14,766)

Profit attributable to ownersof parent

52,163Purchase of treasury stock(131,287)

Changes in other equity, net

36

36

7,010

7,093

55

7,157

Total changes during the year

36

36

7,010

7,093

55

(86,722)496(3,363)(8,104)(10,971)

5,175

6,236

3,521

32,353

50

34

23

211

(527)

(555)

(600)

(5,513)Purchase of intangible assets

(217)

(114)

(179)

(1,644)

Loss on disposal of property, plantand equipment
Loss/(gain) on valuation of
investment securities(Increase)/decrease in notes andaccounts receivable(Increase)/decrease in inventory

Changes during the year

Balance at March 31, 2020

7,624

1,359

455,683

Increase/(decrease) in notes andaccounts payable - trade
Increase/(decrease) in advances
received
Other cash flows from operating
activities

Financial Information

Balance at April 1, 2019

Fiscal year ended
March 31, 2020

6,465

Increase/(decrease) in liabilities for
retirement benefits(Increase)/decrease in assets for
retirement benefits
Increase/(decrease) in provision forwarranties for completed construction
Increase/(decrease) in provision forloss on construction contracts
Interest income and dividends
incomeChanges in other equity, net
Total changes during the year

Fiscal year ended
March 31, 2020

Income before income taxes

Amortization of goodwill(14,766)

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
Net (increase)/decrease in time
deposits
Purchase of property, plant andequipment

71
71

METAWATER REPORT2020
METAWATERREPORT
2020

Purchase of investment securities

(110)

(95)

(223)

(2,049)Acquisition of newly consolidated
subsidiaries

—

—

(426)

(3,914)

Payments of loans receivable

(1)

—

(2)

(18)

Collection of loans receivable

28

27

27

248

Other cash flows from investing
activities

(91)

(103)

0

0

Net cash used in investing activities

(868)

(805)

(1,380)(12,680)METAWATERREPORT2020
2020
METAWATERREPORT

72
72

[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, 2020

Fiscal year ended
March 31, 2020

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(Presentation of Amounts in the Consolidated Financial Statements)

Proceeds from short-term loans
payable

452

55

—

—

Repayments of short-term loans
payable

(740)

(282)

(330)

(3,032)

Repayments of PFI and otherprojects finance loans

(825)

(833)

(844)

(7,755)Purchase of treasury stock

(0)

(0)

(14,288)(131,287)(1,503)(1,555)(1,607)(14,766)

(1)

(1)

(1)

(9)

(2,619)(2,617)(17,072)(156,868)

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 shownin the financial statements do not necessarily agree with the sum of the individual amounts. U.S. dollar amounts presented in the financial statements
are included solely for convenience. The rate of ¥108.83 to US$1.00, prevailing on March 31, 2020, 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)

Cash dividends paid

The accompanying consolidated financial statements include the accounts of the Company and any significant companies controlled directly or indirectlyby the Company.

Cash dividends paid to noncontrolling interests
Net cash used in financing activities

Investments in companies over which the Company exercises significant influence in terms of their operating and financial policies have been accounted
for by the equity method.
As of March 31, 2020, the numbers of consolidated subsidiaries were 10 (9 in 2019). Non-consolidated subsidiaries whose combined assets, net sales,

Effect of exchange rate change on cash
and cash equivalents

(63)

4

11

101

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 cost

Net increase/(decrease) in cash andcash equivalents

1,625

2,819

(14,920)(137,094)

without applying the equity method of accounting. METAWATER USA, INC. and five 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

Cash and cash equivalents at March 31

23,352*1

24,977

24,977*1

27,796*1

27,796

255,407

12,876

118,312transactions from January 1 to March 31. All significant intercompany balances and transactions have been eliminated in consolidation.

(Summary of Significant Accounting Policies)
1. Valuation standard and methods for significant assets(1) Securities

Financial Information

Cash and cash equivalents at April 1

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
73

METAWATER REPORT2020
METAWATERREPORT
2020

METAWATERREPORT2020
2020
METAWATERREPORT74
74

(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 straightline 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, 2020.

(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 10 or 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
75

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2020
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76

(Unapplied Accounting Standards, etc.)(Notes to Consolidated Balance Sheets)- Accounting Standards Board of Japan (ASBJ) Statement No. 29 “Accounting Standard for Revenue Recognition” (March 31, 2020)*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 31, 2020)

As of March 31, 2019
(Millions of yen)

As of March 31, 2020
(Millions of yen)

As of March 31, 2020
(Thousands of U.S. dollars)

1,020

1,167

10,723As of March 31, 2019
(Millions of yen)

As of March 31, 2020
(Millions of yen)

As of March 31, 2020
(Thousands of U.S. dollars)

3,827

4,287

39,391

Investment 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, 2019
(Millions of yen)

As of March 31, 2020
(Millions of yen)

As of March 31, 2020
(Thousands of U.S. dollars)

Cash and deposits

1,599

1,598

14,683

Notes and accounts receivable - trade

13,393

11,437105,090

14,993

13,035

119,773

As of March 31, 2020
(Millions of yen)

As of March 31, 2020
(Thousands of U.S. dollars)

Total

The following assets eliminated in the consolidation procedures are pledged as security.
As of March 31, 2019
(Millions of yen)
152

152

1,396

Long-term loans receivable

487

448

4,116

Total

639

601

5,522

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).

77
77

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As of March 31, 2019
(Millions of yen)

As of March 31, 2020
(Millions of yen)

As of March 31, 2020
(Thousands of U.S. dollars)

Investment securities

408

431

3,960

Long-term loans receivable

195

169

1,552

Total

603

601

5,522

METAWATERREPORT2020
2020
METAWATERREPORT

Financial Information*4.

Investments in subsidiaries

78
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, 2019
(Millions of yen)

As of March 31, 2020
(Millions of yen)

As of March 31, 2020
(Thousands of U.S. dollars)

144

126

1,157

Osaka Bioenergy Co., Ltd.

(2) Performance guarantee
As of March 31, 2019
(Millions of yen)

As of March 31, 2020
(Millions of yen)

As of March 31, 2020
(Thousands of U.S. dollars)

Ariake Water Management Co., Ltd.

27

27

248

Aizuwakamatsu Aqua Partner Co., Ltd.

542

523

4,805

Sasebo Aqua Solution Co., Ltd.

242

226

2,076

Sorami Bio Partners Co., Ltd.

63

63

578

Northern Akita Eco-resource Management Co.,
Ltd.

17

17

156

13

14

128

Gotemba Oyama Eco Partners Co., Ltd.

14

14

128

922

887

8,150

(Notes to Consolidated Statement of Income)*1.

Fiscal year ended
March 31, 2019
(Millions of yen)
Valuation difference on available-for-salesecurities
Amount arising during the year

(7)

6

Reclassification adjustments

—

—

—

Amount before tax effect

(7)

6

55

Tax effect

3

(1)

(9)

Valuation difference on available-forsale securities

(4)

4

36

(455)

4

36

Amount recognized during the year

533

546

5,016

Reclassification adjustments

659

553

5,081

Before tax effect adjustment

1,193

1,100

10,107

Tax effects

(365)

(336)

(3,087)

828

763

7,010

367

772

7,093

Amount recognized during the year

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, 2019
(Millions of yen)

Fiscal year ended March 31, 2020
(Millions of yen)

Fiscal year ended March 31, 2020
(Thousands of U.S. dollars)

363

(74)

(679)

(Notes to Consolidated Statement of Changes in Shareholders’ Equity)
Fiscal year ended March 31, 2019
1. Shares issued

The major items and their amounts of selling, general and administrative expenses are as follows:
Fiscal year ended
March 31, 2020
(Millions of yen)

*4.

79
79

Fiscal year ended
March 31, 2020
(Thousands of U.S. dollars)

Salaries and allowances

4,050

4,284

39,364

Bonuses

1,466

1,484

13,635Retirement benefit expenses

501

424

3,895

Provision for warranties
for completed construction

446

(16)

(147)

1,908

2,374

21,813

Increase

Decrease

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

25,923,500

Number of shares
as of April 1, 2018

Increase

Decrease

Number of shares
as of March 31, 2019

91

59

—

150

2. Treasury stock
Type of shares
Common stock(shares)(Details of the changes)
Increase resulting from purchase of shares less than one unit: 59 shares
3. Dividends(1) Dividends paid

The details of loss on disposal of non-current assets are as follows:
Fiscal year ended March 31, 2019

Fiscal year ended March 31, 2020

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, 2019
(Millions of yen)

Fiscal year ended March 31, 2020
(Millions of yen)

Fiscal year ended March 31, 2020
(Thousands of U.S. dollars)

1,908

2,374

21,813METAWATER REPORT2020
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2020

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

Financial Information

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

Research and development expenses

*3.

55

Foreign currency translation adjustment

Type of shares*2.

Fiscal year ended
March 31, 2020
(Thousands of U.S.
dollars)

Fiscal year ended
March 31, 2020
(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, 2020 and 2019

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, 2018

Common stock

751

29.00

March 31, 2018

June 7, 2018

Board of Directors’
meeting held on
November 13, 2018

Common stock

803

31.00

September 30, 2018

December 4, 2018

(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

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80
80

Fiscal year ended March 31, 2020

(Financial Instruments)

1. Shares issued

1. Overview

Type of shares
Common stock(shares)Number of shares
as of April 1, 2019

Increase

Decrease

Number of shares
as of March 31, 2020

25,923,500——

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, 2019

Increase

Decrease

Number of shares
as of March 31, 2020150

4,200,036—

4,200,186

Common stock(shares)(2) Type of financial instruments, related risk and risk management system
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: 36 shares
Purchase of treasury stock in accordance with the resolution of the Board of Directors’ meeting held on October 29, 2019: 4,200,000 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

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

Type of shares

Board of Directors’
meeting held on May
22, 2019

Common stock

Board of Directors’
meeting held on
November 12, 2019

Common stock

Although some of trade payables are denominated in foreign currencies and are exposed to currency fluctuation risk, they are hedged with

Total amount ofdividends(Millions of yen)

Dividend per share
(Yen)

803

31.00

Cut-off date

Effective dateforward foreign currency contracts where necessary.
Loans payable are mainly used for the acquisition of shares of subsidiaries, with the maximum maturity period of 7 years after the balance

March 31, 2019

June 6, 2019sheet date. PFI and other project finance loans are intended to raise funds for specific businesses such as the PFI business, with the maximum
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 of

803

31.00

September 30, 2019

December 3, 2019

interest 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 effectivenessResolution

Type of shares

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

Board of Directors’
meeting held on May
22, 2019

Common stock

7,378

0.28

March 31, 2019

June 6, 2019

Board of Directors’
meeting held on
November 12, 2019

Common stock

7,378

0.28

September 30, 2019

December 3, 2019

Dividend per share(U.S. dollars)

Cut-off date

Effective dateis 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, 2020 and 2019 and estimated fair value are shown(please see Note 2).

(2) Dividends whose record date falls in the fiscal year ended March 31, 2020, 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 21,
2020

Commonstock

Retainedearnings

868

40.00

March 31, 2020

June 5, 2020

Resolution

Type ofshares

Source ofdividends

Cut-off date

Effective date

Board of Directors’
meeting held on May 21,
2020

Commonstock

Retainedearnings

March 31, 2020

June 5, 2020

Total amount ofdividends
Dividend per share(Thousands of U.S.
(U.S. dollars)
dollars)
7,975

0.36

Financial Informationin the following table. The financial instruments whose fair value is deemed extremely difficult to determine are not included in the table below(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
81

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2020

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

Fiscal year ended
March 31, 2020
(Millions of yen)

Fiscal year ended
March 31, 2020
(Thousands of U.S.
dollars)

28,58913,645

125,379

(792)

(769)

(7,066)

27,796

12,876

118,312METAWATERREPORT2020
2020
METAWATERREPORT82
82

As of March 31, 2019

(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

28,58928,589—The fair value of cash and deposits is based on their carrying amount, since the fair value approximates their carrying amount due to the short(2) Notes and accounts receivable - trade76,282

76,33249

maturity period of the instrument.

(1)

Cash and deposits(3) Investment securities
Available-for-sale securities

103

103

—

104,976

105,025

49(1) Accounts payable - trade18,27818,278—(2) Electronically recorded obligations

8,380

8,380

—

(3) Short-term loans payable

337

337

—

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

844

844

—

(5) Long-term loans payable

1,847

1,840

(6)

(6) PFI and other projects finance loans

10,705

10,974269

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

40,39240,655262(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, 2020

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

13,645

13,645—(2) Notes and accounts receivable - trade78,10978,088

(20)

110

110

—

91,86591,844(20)

period of the instruments.

(5)(3) Investment securities
Available-for-sale securities
Total assets(1) Accounts payable - trade

19,801

19,801—(2) Electronically recorded obligations

11,603

11,603

—

276

276

—

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

855

855

—

1,539

1,560

21

Since interest rate swaps under short-cut method are treated together with long-term loans payable and PFI and other project finance loans that

(6) PFI and other projects finance loans

9,849

10,060211

are subject to hedging, their fair value is included in the fair value of PFI and other project finance loans.

—

—

—

43,925

44,158233

Carrying value(Thousands of U.S.
dollars)

Fair value(Thousands of U.S.
dollars)

Difference(Thousands of U.S.
dollars)(1) Cash and deposits

125,379

125,379—(2) Notes and accounts receivable - trade717,715

717,522(183)

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

1,010

1,010

—

844,114843,921(183)(1) Accounts payable - trade

181,944

181,944—(2) Electronically recorded obligations

106,615

106,615

—

2,536

2,536

—

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

7,856

7,856

—

14,141

14,334

192(6) PFI and other projects finance loans

90,49892,437

1,938

—

—

—

403,611405,7522,140(7) Derivatives
Total liabilities

METAWATER REPORT2020
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2020

The fair value of interest rate swaps is based on the quoted price obtained from the counterparty financial institution.

Financial Information(7) Derivatives

83
83

Long-term loans payable and (6) 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, 2019
(Millions of yen)

As of March 31, 2020
(Millions of yen)

As of March 31, 2020
(Thousands of U.S.
dollars)

1,238

1,457

13,387Since 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”.

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2020
METAWATERREPORT

84
84

(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, 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)

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

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

—

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

Due after fifteen
years(Millions of yen)

Total
As of March 31, 2020
As of March 31, 2020
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

13,645———

Notes and accounts receivable - trade

66,676

3,857

3,802

3,773

80,322

3,857

3,802

7,546

Total

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

276

1,266

272

—

—

PFI and other projects finance loans

855

3,320

3,735

2,794

—

1,131

4,587

4,007

2,794

—

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)
125,379———

Notes and accounts receivable - trade612,661

35,44034,93534,668738,050

35,44034,93569,337Total

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

2,536

11,632

2,499

—

—

PFI and other projects finance loans

7,856

30,50634,31925,673—

10,392

42,14836,81825,673

—

Total

85
85

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METAWATERREPORT2020
2020
METAWATERREPORT

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
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, 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:
StocksTotal

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

103

33

70

103

33

70

As of March 31, 2019
Hedge accounting
methodAs of March 31, 2020
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

110

33

76

110

33

76

Carrying value(Thousands of U.S. dollars)

Acquisition cost(Thousands of U.S. dollars)

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

1,010

303

698

1,010

303

698

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
payable971

832(Note)

PFI and otherprojects financeloans

10,5719,806(Note)

11,543

10,638Type 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, 2020

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

Fair value(Millions of yen)

Long-term loans
payable816

680(Note)

PFI and otherprojects finance
loans

9,806

9,029

(Note)

10,622

9,709

Contract 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

7,497

6,248

(Note)

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

PFI and otherprojects financeloans

90,10382,964(Note)

97,601

89,212

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.

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

Overview of retirement benefit plans
The Company has lump-sum payment plans and a contract-type corporate pension plan as its defined benefit plan. In addition, the Company has adefined contribution pension plan. The Company has established a retirement benefit trust.
Certain overseas consolidated subsidiaries have a defined benefit or defined contribution plan.

Service cost

Certain domestic consolidated subsidiary has The Smaller Enterprise Retirement Allowance Mutual Aid Scheme. In addition to such scheme,

Fiscal year ended
March 31, 2020
(Millions of yen)

Fiscal year ended
March 31, 2020
(Thousands of U.S.
dollars)

736

697

6,404

Interest cost

154

157

1,442

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

Expected return on plan assets

(146)

(161)

(1,479)who meet the prescribed requirements upon their retirement.

Amortization of actuarial gain or loss

648

613

5,632

Amortization of prior service cost

8

8

73

(43)

(53)

(486)

1,358

1,263

11,605

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

Other
2.

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

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, 2019
(Millions of yen)

Fiscal year ended
March 31, 2020
(Millions of yen)

Fiscal year ended
March 31, 2020
(Thousands of U.S.
dollars)
157,704

16,804

17,163Service cost

736

697

6,404

Interest cost

154

157

1,442

Actuarial gain and loss

117

195

1,791

Retirement benefits paid

(636)

(807)

(7,415)

Other

(12)

(10)

(91)

17,163

17,396

159,845

Retirement benefit obligation at the end of the year(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, 2019
(Millions of yen)
Prior service cost

(6)

8

8

73

1,184

1,091

10,024

Total

1,193

1,100

10,107The components of remeasurements of defined benefit plans included in accumulated other comprehensive income (before tax effect) are as
follows:

Fiscal year ended
March 31, 2020
(Thousands of U.S.
dollars)

Unrecognized prior service cost

As of March 31, 2020
(Thousands of U.S. dollars)

16

7

64

Unrecognized actuarial gain and loss

2,355

1,264

11,614

Total

2,372

1,272

11,687

12,331

13,935

128,043

146

161

1,479

Actuarial gain and loss

653

673

6,183

Contribution by the companies

1,036

1,082

9,942

Retirement benefits paid

(267)

(353)

(3,243)

Stocks

29%

31%

Bonds

39

33

General accounts

20

19

Other

12

17

Total

100

100

Plan assets at fair value at the end of the year

43

44

404

13,935

15,544

142,828

The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheets as of March 31,
2019 and 2020 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, 2019

(Note)

As of March 31, 2020

Financial Information

Fiscal year ended
March 31, 2020
(Millions of yen)

As of March 31, 2020
(Millions of yen)

Expected return on plan assets

Other

(3)

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

Fiscal year ended
March 31, 2020
(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, 2020
(Millions of yen)

Retirement benefit trust established for the corporate pension plans is included and equivalent to 9.4% of total amount of plan assets as ofMarch 31, 2019 and 10.5% as of March 31, 2020.

As of March 31, 2019
(Millions of yen)

As of March 31, 2020
(Millions of yen)

As of March 31, 2020
(Thousands of U.S. dollars)

Funded retirement benefit obligation

14,761

14,944

137,315

Plan assets at fair value(13,935)(15,544)(142,828)

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.

826

(599)

(5,503)

Unfunded retirement benefit obligation

2,402

2,452

22,530Net amount of liabilities and assets recognized in the
consolidated balance sheet

3,228

1,852

17,017

Liability for retirement benefit

4,603

4,025

36,984Long-term expected rates of return on plan assets

Assets for retirement benefits

1,374

2,172

19,957

Expected rates of salary increase

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

3,228

1,852

17,017(8) The assumptions used in accounting for the defined benefit plans are as follows:
Fiscal year ended March 31,
2019
Discount rates

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0.6–1.2%

Fiscal year ended March 31,
2020
0.05–1.2%

Mainly 1.5

Mainly 1.5

1.2–8.5

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3.

Defined contribution plans

As of March 31, 2020

Contributions of defined contribution plans for the fiscal years ended March 31, 2019 and 2020 were ¥142 million and ¥151 million (US$1,387

One year or less(Millions of yen)

thousand), respectively.
Unused tax losses (a)Valuation allowance
Deferred tax assets(Income Taxes)———

1. The significant components of deferred tax assets and deferred tax liabilities

As of March 31, 2019
(Millions of yen)

As of March 31, 2020
(Millions of yen)

One year or less(Thousands of
U.S. dollars)

As of March 31, 2020
(Thousands of U.S.
dollars)

Unused tax losses (a)Valuation allowance
Deferred tax assets

Deferred tax assets:
Enterprise tax payable

178

189

1,736

Accrued bonuses

824

872

8,012

Provision for loss on construction contracts

158

182

1,672

Provision for warranties for completed
construction

367

359

3,298

Excess of depreciation

328

330

3,032

Liability for retirement benefit

1,849

1,425

13,093

Unused tax losses (Note 2)

187

165

1,516

Other

705

753

6,919

4,600

4,278

39,309

(165)

(160)

(1,470)Subtotal
Valuation allowance for unused tax losses (Note 2)
Valuation allowance for the total amount of
deductible temporary differences(233)(2,140)

Valuation allowance subtotal (Note 1)

(422)

(394)

(3,620)Total deferred tax assets

4,177

3,884

35,688Gain on contribution of securities toretirement benefit trust

(727)

(858)

(7,883)

Other

(282)

(362)

(3,326)

Total deferred tax liabilities(1,009)(1,221)(11,219)

Net deferred tax assets (liabilities)

3,168

2,662

24,460

Deferred tax liabilities:

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)
—
18
27
—
(18)
(0)
—
—
27

After five years(Thousands of
U.S. dollars)

Total(Thousands of
U.S. dollars)

1,460(1,451)9

1,516(1,470)36(a) Unused tax losses are multiplied by the effective statutory tax rate.

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

As of March 31, 2019

As of March 31, 2020

30.6%

30.6%

Permanently non-deductible items such as entertainment expenses

4.0

1.9

Permanently non-taxable items such as dividends income

(0.1)

(0.2)

Per capita inhabitants’ tax

0.9

0.8

Tax credit for experiment and research expenses

(3.0)

(2.1)

Effective statutory tax rate
(Adjustment)

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

Changes in valuation allowance

3.4

(0.3)

Difference in tax rates of overseas consolidated subsidiaries

(0.5)

(0.4)

Other

(3.2)

(0.2)

Effective income tax rate

32.1

30.1

(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.

(Notes)1. The valuation allowance has decreased by ¥28 million (US$257 thousand). This decrease mainly consists of the reversal of the valuation
allowance relating to the provision for loss on construction contracts in the amount of ¥8 million (US$73 thousand) at the Company and theRegarding 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.

valuation allowance for unused tax losses in the amount of ¥4 million (US$36 thousand) at a consolidated subsidiary, METAWATER USA, INC.
2. Amounts of unused tax losses and deferred tax assets by carryforward period
As of March 31, 2019

(Segment Information)[Segment Information]

One year or less(Millions of yen)
Unused tax losses (a)Valuation allowance
Deferred tax assets

Financial Information

(257)

—
—
—

After one year After two years After three years After four years
through two
through three
through four
through five
After five years
Total
years
years
years
years
(Millions of yen) (Millions of yen)
(Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen)
—
—
2
3
159
165
—
—
(2)
(0)
(158)
(160)
—
—
—
3
1
4

1
(1)
—

After one year After two years After three years After four years
through two
through three
through four
through five
After five years
Total
years
years
years
years
(Millions of yen) (Millions of yen)
(Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen)
—
—
23
—
162
187
—
—
(2)
—
(161)
(165)
—
—
21
—
1
22

(a) Unused tax losses are multiplied by the effective statutory tax rate.

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.
The Company has established business divisions by its products and services at the corporate office, each of which operates undercomprehensive 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
Company’s business divisions in consideration of similarities of types and natures of products and services. “Plant Engineering” segment is primarily
involved in design and construction of water and sewage treatment plants. “Service Solutions” segment is primarily involved in operation, control andrepair of water and sewage treatment plant facilities.
2. Determination of sales, income or loss, assets, liabilities and other items for each reportable segment
Accounting treatment applied to the business segment reported is generally consistent with accounting treatment stated in “Important Matters for
Basis of Preparation of Consolidated Financial Statements”.
In addition, segment income is determined based on operating income, which is consistent with operating income for the consolidated
statement of income.

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3. Sales, income or loss, assets, liabilities and other items by reportable segment[Related Information]
Fiscal year ended March 31, 2019

Fiscal year ended March 31, 2020
(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

65,517

51,824

117,342—

117,342

—

—

—

—

—
117,342

65,517

51,824

117,342—

Segment income

3,191

4,416

7,607

—

7,607

Segment assets

56,15846,512

102,671

29,949132,620A 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)

Other items
Depreciation

765

582

1,348

—

1,348

Capital expenditures

584

307

891

—

891

(Note) The amount of corporate assets included in adjustments of segment assets is ¥29,949 million. The corporate assets mainly represent cash andJapan

The United States

Switzerland

Total

1,346

1,449

391

3,188

3. Information about major customers(Millions of yen)deposits and investment securities.
Name of customer

Net sales

Related business segment

TOKYO METROPOLITAN GOVERNMENT

19,967

Plant Engineering Business
Service Solutions Business

Fiscal year ended March 31, 2020
(Millions of yen)
Reportable segments
Adjustments(Note)

Fiscal year ended March 31, 2020

Plant
Engineering
Business

Service
Solutions
Business

Total

72,36656,356

128,723

—

—

—

—

—

—

72,36656,356

128,723—

128,723

Segment income

3,188

5,035

8,223

—

8,223

Segment assets

50,18753,053103,240

16,228

119,469

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

128,723
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.

Financial Information

Other items
Depreciation

630

467

1,098

—

1,098

Capital expenditures

526

267

794

—

794

(Thousands of U.S. dollars)(2) Property, plant and equipment(Millions of yen)Japan

The United States

Switzerland

Other

Total

1,327

1,421

404

30

3,184

Japan

The United States

Switzerland

Other

Total

12,193

13,057

3,712

275

29,256

Reportable segments
Adjustments(Note)(Thousands of U.S. dollars)

Plant
Engineering
Business

Service
Solutions
Business

Total

664,945

517,835

1,182,789

—

—

—

—

—

—

664,945

517,835

1,182,789—

1,182,789

Segment income

29,293

46,26475,558—75,558Segment assets

461,150

487,485

948,635

149,113

1,097,757

Consolidated

Net sales
Sales to third parties
Inter-segment sales and transfers
Net sales

1,182,789

Other items
Depreciation

5,788

4,291

10,089—10,089

Capital expenditures

4,833

2,453

7,295

—

7,295

(Note) The amount of corporate assets included in adjustments of segment assets is ¥16,228 million (US$149,113 thousand). The corporate assets
mainly represent cash and deposits and investment securities.

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3. Information about major customers(Millions of yen)
Name of customer

Net sales

Related business segment

TOKYO METROPOLITAN GOVERNMENT

17,267

Plant Engineering Business
Service Solutions Business(Thousands of U.S. dollars)Name of customer
TOKYO METROPOLITAN GOVERNMENT

Net sales

Related business segment

158,660

Plant Engineering Business
Service Solutions Business

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[Information about Impairment Loss on Non-current Assets by Reportable Segment](Related Party Information)

Fiscal year ended March 31, 2019

Fiscal year ended March 31, 2019No 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, 2020

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, 2019

Amortization
Unamortized balance

Total

Corporate/
Eliminations

138

—

138

—

138

1,670

—

1,670

—

1,670

Fiscal year ended March 31, 2020

Amortization
Unamortized balance

Service
Solutions
Business

Total

Corporate/
Eliminations

Total

148

—

148

—

148

1,671

—

1,671

—

1,671

Subsidiaryof otheraffiliate

FUJI FURUKAWAENGINEERING &CONSTRUCTION
CO. LTD.

Saiwaiku,
Kawasaki
-shi

1,970

Design and execution of
construction of plantfacilities, air conditioning/
electricity/building/incidental
facilities, andtelecommunications

Subsidiary of Hokkaido Fuji Electric Chuo-ku,
other affiliateCo., Ltd.
Sapporo-shi

100

Sale, installation, and repairof electrical machinery andapparatus/control systems
and electronic components

2.

Accounts
payable trade

2,786

—

Entrustmentof theCompany’s
construction
contracts

Entrustment ofconstruction
contracts(Note 1, 2)

5,048

Accounts
payable trade

1,221

—

Acceptance ofconstruction
contracts ofsaid company

Acceptance ofconstruction
contracts(Note 1, 2)858

Accounts
receivable trade831

Concurrent
holding of
positions byofficers

Of the amounts stated above, the transaction amount excludes consumption taxes, while the balance at end of the fiscal year includes

Transaction terms and the policy to determine transaction terms

Totaltransactions, as well as by reference to actual situation of the market.

Total(2)Business transactions between consolidated subsidiaries of the company filing the consolidated financial statements and related parties

1,359

—

1,359

—

1,359

Unamortized balance

15,354—

15,354—

15,354

No items to report.

2.

Financial Information

Service
Solutions
Business

Corporate/
Eliminations

Amortization

Fiscal year ended March 31, 2019

7,268

Purchase of
products

Transaction terms such as prices are determined through negotiation in each case based on a quotation as is the case with general

Reportable segments[Information about Gain on Bargain Purchase by Reportable Segment]

Purchase of
products(Note 1, 2)

Relationship

Nature oftransaction

consumption taxes.

(Thousands of U.S. dollars)

Plant
Engineering
Business

Purchase of
products(Held)
Direct 28.9

FUJI ELECTRIC CO.,
LTD.

1.

1,258

47,586Other
affiliate(Notes)Accounts
payable trade

Development, manufacture,and sale of products related
to power electronics
systems, electric
generation, electronic
devices and food
distribution, and provision ofservices related thereto

Kawasakiku,
Kawasakishi

Reportable segments
Plant
Engineering
Business

1,590(Held)
Direct 28.9

Mizuho-ku,
Nagoya-shi(Millions of yen)

Purchase of
products(Note 1, 2)

69,849NGK INSULATORS,
LTD.

Total

Balance atthe end ofyear(Millions ofyen)

Development, manufacture,and sale of products related
to electric power, ceramics,
electronics, and process
technology, and provision ofservices related thereto

Reportable segments
Service
Solutions
Business

Account
title

Type of business(Millions of yen)

Plant
Engineering
Business

Transaction
amount(Millions ofyen)

Percentage ofvoting rights
holding (held)(%)

Capital stock orcontributions(Millions of yen)

Note concerning the parent company or significant affiliated companies
No items to report.

No items to report.

Fiscal year ended March 31, 2020
No items to report.

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Fiscal year ended March 31, 2020
1.

(Per Share Information)
Fiscal year ended
March 31, 2019
(Yen)

Fiscal year ended
March 31, 2020
(Yen)

Fiscal year ended
March 31, 2020
(U.S. dollars)

Net assets per share

2,271.67

2,276.07

20.91

Net income per share

199.46231.52

2.12

Fiscal year ended
March 31, 2020
(Millions of yen)

Fiscal year ended
March 31, 2020
(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.

Address

Mizuho-ku,
Nagoya-shi

Kawasaki-ku,
Kawasaki-shi

Capital stockor
contributions(Millions ofyen)Type of business

Development, manufacture,and sale of products related
69,849to electric power, ceramics,(US$641,817
electronics, and process
thousand)technology, and provision ofservices related thereto

Development, manufacture,and sale of products related
47,586 to power electronics(US$437,250 systems, electronic devices,
thousand) food distribution and power
plant, and provision ofservices related thereto

Percentage
of votingrightsholding(held) (%)(Held)
Direct 25.3

(Held)
Direct 24.4

Subsidiaryof otheraffiliate

FUJI FURUKAWAENGINEERING &CONSTRUCTION
CO. LTD.

Saiwaiku,
Kawasaki-shi

Design and execution of
construction of plant
1,970
facilities, air conditioning/(US$18,101
electricity/building/incidental
thousand)facilities, andtelecommunications—

Subsidiaryof otheraffiliate

Hokkaido Fuji
Electric Co., Ltd.

Chuo-ku,
Sapporoshi

Sale, installation, and repair
100of electrical machinery and(US$918
apparatus/control systems
thousand)and electronic components—(Notes)1.

Relationship

Nature oftransaction

Transaction
amount(Millions ofyen)Account
title

Balance atthe endof year(Millions ofyen)

Purchase of
products

Purchase of
products (Note
1, 2)

958
(US$8,802
thousand)Accounts
payable trade797(US$7,323
thousand)Concurrent
holding of
positions byofficers

Purchase oftreasury stock(Note 3)

6,804
(US$62,519
thousand)——Purchase of
products(Note 1, 2)

8,292(US$76,192
thousand)Accounts
payable trade

Purchase oftreasury stock(Note 3)

7,484
(US$68,767
thousand)—Entrustment of
the Company’s
construction
contracts

Entrustmentofconstruction
contracts(Note 1, 2)

4,706(US$43,241
thousand)Accounts
payable trade

1,485(US$13,645
thousand)Acceptance ofconstruction
contracts ofsaid company

Acceptance ofconstruction
contracts(Note 1, 2)

764 Accounts(US$7,020 receivable thousand)
trade

671
(US$6,165
thousand)

3,153(US$28,971
thousand)Purchase of
products—

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 general

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, 2019
(Millions of yen)

Profit attributable to owners of parent

5,170

5,677

52,163

—

—

—

5,170

5,677

52,16325,923,379

24,523,326

24,523,326

Fiscal year ended
March 31, 2020
(Millions of yen)

Fiscal year ended
March 31, 2020
(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, 2019
(Millions of yen)

Total net assets

59,03149,592455,683

142

148

1,359

(Non-controlling interests included in the above)

(142)

(148)

(1,359)Net assets attributable to shares of common stock

58,88949,443454,31425,923,350

21,723,314

21,723,314

Deduction from total net assets

Number of common stock used for calculation of net
assets per share (number of shares)

The purchase of treasury stock was conducted through a tender offer with the purchase price of ¥3,402 (US$31.25) per share of common
stock in accordance with the resolution of the Board of Directors’ meeting held on October 29, 2019.

(Significant Subsequent Event)No items to report.

(2)Business transactions between consolidated subsidiaries of the company filing the consolidated financial statements and related parties
No items to report.

2.

Financial Informationtransactions, as well as by reference to actual situation of the market.
3.

1.

Net income per shareconsumption taxes.
2.

(Notes)

Note concerning the parent company or significant affiliated companies
No items to report.

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5.

[Supplementary Schedules][Schedule of Bonds]
No items to report.

[Schedule of Loans]
Balance as ofApril 1, 2019
(Millions ofyen)

Category

Balance as ofMarch 31, 2020
(Millions ofyen)

Balance as of
Balance as ofApril 1, 2019
March 31, 2020
(Thousands of U.S. (Thousands of U.S.
dollars)
dollars)

Averageinterest rate(%)

Due date

Short-term loans payable

337

276

3,096

2,536

3.32

—

Current portion of PFI andother project finance loans

844

855

7,755

7,856

1.06

—

Long-term loans payable

1,847

1,539

16,97114,141

3.21

April 25, 2022 toJanuary 14, 2026

PFI and other projects financeloans

10,705

9,849

98,36490,498

1.17

June 22, 2026 toNovember 30,
2033

Total

13,733

12,520126,187

115,041——(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

276

446

272

272

PFI and other projects
finance loans

862

873

885

698

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

2,536

4,098

2,499

2,499

PFI and other projects
finance loans

7,920

8,021

8,131

6,413

[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.

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Corporate Information

トップメッセージ

Corporate Overview

Stock-related matters As of March 31, 2020

Company Name

METAWATER Co., Ltd.

Stock Exchange listing		

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

April 1, 2008

Chairman and
Representative Director

Yasushi Nakamura

Number of employee

3,082

List of bases

TEL:+81-(0)42-589-6900
TEL:+81-(0)52-884-6800

Handa (Aichi), lchihara (Chiba), Chiyoda-ku (Tokyo)

METAWATER SERVICES Co., Ltd.*METAWATER TECH Co., Ltd.
METAWATER USA, INC.*
SIC Co., Ltd.
Aqua-Aerobic Systems, Inc.*
Toriden-Shoji Co.
Wigen Companies, Inc.*
Akebono Engineering Co.
Mecana Umwelttechnik GmbH*
Water Next Yokohama Co., Ltd.*FUCHS Enprotec GmbH*Techno Clean Hokuso Co.*
Rood Wit Blauw Holding B.V.
Aqua Service Aichi Co.**: Scope of consolidated statemen					

METAWATER REPORT 2020

Financial institutions

Other domestic corporation

Private & Others

13.99%

42.38%

21.16%

Foreign corporation

21.14%

Status of dominant shareholders (Top 10)
Name of shareholder

Number of shares
owned(1,000 shares)

Percentage ofshares owned(%)

NGK INSULATORS, LTD.

5,500

25.32

Fuji Electric Co., Ltd.

5,300

24.40

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

1,163

5.36

JP MORGAN CHASE BANK 385632

863

3.98

Japan Trustee Services Bank, Ltd. (Trust account)

833

3.84

GOVERNMENT OF NORWAY

671

3.09

Japan Trustee Services Bank, Ltd. (Trust account 9)

425

1.96

The Nomura Trust and Banking Co., Ltd. (Trust account)

346

1.59

CREDIT SUISSE AG, DUBLIN BRANCH PRIME CLIENT ASSETEQUITY ACCOUNT

216

1.00

SSBTC CLIENT OMNIBUS ACCOUNT

212

0.98

Corporate Information

101

3,720

TEL:+81-(0)3-6853-7300

R&D Centers

United States, Netherlands, Switzerland, Germany, Vietnam, Cambodia, Singapore

25,923,500 shares

1.33%

Tokyo (Headquarters), Sapporo, Sendai, Yokohama, Nagoya, Osaka, Hiroshima, Takamatsu, Fukuoka

Overseas bases

Total number of issued shares

Financial instruments
business operators

Main sales bases

Main group companies

70,000,000 shares

Breakdown of shareholders*As of March 31, 2020, consolidated

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

Total number of authorized shares

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

First section of the Tokyo Stock Exchange
Industrial Classification：Electric Power and Gas. (code: 9551)

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Corporate Information

Map of bases as of March 31, 2020
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.
Mae-chanAqua-Aerobic Systems, Inc.
Europe Representative Ofﬁce
Rood Wit Blauw Holding B.V.

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.

Wigen Companies, Inc.

FUCHS Enprotec GmbH
Mecana Umwelttechnick GmbH

Issuing the “METAWATER REPORT 2020”

Hanoi Representative Ofﬁce
Cambodia Representative Ofﬁce• Period in the scope of reporting

Singapore Representative Ofﬁce

The performance for FY2019 (fiscal year ending March 2020) 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

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METAWATER Co., Ltd. : JR Kanda Manseibashi Bldg., 1-25 Kandasuda-cho, Chiyoda-ku, Tokyo 101-0041