2017 Annual Report

Takuma Provides New Value for Society in the Environ mental and Energy Fields.
Takuma develops a variety of technologies around a core set of combustion technologies, including
waste treatment and water treatment components.
Our businesses in the environmental and energy fields are dedicated to resolving environmental
issues such as global warming and to helping achieve a recycling-oriented society.
At Takuma, our mission is to pursue technologies for coexisting in harmony with nature in order thathumankind and the Earth might enjoy a truly rich and fulfilling future.

Contents

Municipal solid waste treatment plants

Industrial waste treatment plants

General-purpose boilers

We support the realization of a recycling-oriented society
using advanced waste treatment technologies that meet theneeds of local communities.

Using advanced incineration technologies, we can even treat
toxic substances suitably and we are supporting theenvironmental protection efforts of industry.

As the convergence of Takuma combustion technologies, ourboilers are a reliable brand that has earned the support of awide range of industries.

Energy from Waste plant● Pyrolysis gasification and melting plant● Resource recycling and collection plant● Bulky garbage crushing plant● Incineration ash and fly ash melting plant● Waste to solid fuel conversion plant● Transition and intermediate processing plant● Raw fuel (biogas) recovery plant● Various types of pollution prevention equipment●

Step grate stoker incineration plant● Rotary kiln and stoker incineration plant● Fluid bed incineration plant●●Once-through boiler (Eqos, Super Eqos)● Vacuum-type water heater (Vacotin heater)● Package water-tube boiler● Smoke tube boiler (RE boiler)● Heat-transfer oil boiler (thermoheater)● Radiation heating equipment (strip heater)● Various equipment for ships

Corporate Information

3

The Takuma Group Network

5

Financial Highlights

7

Message from Top Management

9

Takuma Group 11th Medium-Term
Management Plan — An Overview

12

Business Development

Note: These products are handled by Nippon Thermoener Co., Ltd., which is one of ourgroup companies.

1. Activities of Our Municipal Solid Waste
Treatment Plant Business15

2. Activities of Our Energy Plant Business19

3. Activities of Our Water Treatment Business23

4. Activities of Our Overseas Business

25

CSR Initiatives
Consumer Issues
Activities Involving Product Quality

27

Corporate Governance

Energy from Waste plantIndustrial waste treatment plant

Plant that generates power fromindustrial waste and provides heatto a plantation

Vacotin heater

Thermoheater

Super Eqos

RE boiler

Energy plants

Water treatment plants

Air-conditioning equipment and clean systems

Takuma’s core technologies are utilized in various types ofboilers such as biomass fuel boilers as well as total systems.

We are working to purify dirty water with a holistic
perspective through a “dialogue with water.”

We provide comfortable, clean environments to customers inthe semiconductor industry as well as locations such asuniversities, research institutions, and hospitals.

●

Biomass boiler
Fossil fuel boiler● Waste heat boiler● Power generation plant●

Sewage and wastewater processing plant
Various types of advanced sewage processing plants● Sludge processing plant● Sewage sludge-fueled power plant● Plant to process water that infiltrates final disposal sites

●

●

●

●

Biomass power generation boiler

1

Bulky garbage crushing plant

TAKUMA 2017 ANNUAL REPORT

Waste heat boiler

Continuous up-flow sand filter

Purification of park pond water

Building Equipment
Air-conditioning Equipment● Cleaning and Drying Devices● Clean Room
● Clean Devices● Chemical Filters

Chemical Filters

Clean Oven

Corporate Governance28

Directors, Audit & Supervisory Committee
Members, Executive Officers

29

IR Activities / Stock Information

30

Risk Management Structure

31

Business Continuity Plan (BCP)

32

Participation in the Community

33

Contribution to Society

33

The Environment
Basic Environmental Policy / Environmental
Management

34

Takuma’s CO2 Reduction Technologies

35

Financial Information
Status of Business Activities

37

Financial Statement

43

Clean Booths

TAKUMA 2017 ANNUAL REPORT

2

Corporate Information
Company outline

The History of Takuma

Name:
Head office location:

TAKUMA CO., LTD.
2-2-33 Kinrakuji-cho, Amagasaki, Hyogo 660-0806, Japan
TEL +81-6-6483-2609 FAX +81-6-6483-2751 (operator)
Representative Director: Takaaki Kato, President and CEO
Established:
June 10, 1938
Capital:JPY 13,367,457,968 (as of March 31, 2017)
Main business areas:
The design, construction and superintendence of a wide variety of boilers, plant machinery, pollution
prevention plants, environmental equipment plants, and heating and cooling equipment andfeed-water / drainage sanitation equipment and facilities
The design, construction and superintendence of civil, architecture and other works
Number of employees (non-consolidated): 824 (as of March 31, 2017)
Number of employees (consolidated):
3,447 (as of March 31, 2017)

1912

1912

The first “Takuma boiler” introduced by our
founder, the venerable Tsunekichi Takuma
1920
1930
1938

1930

Takuma Boiler ManufacturingCo., Ltd. founded
Company Motto instituted:“Service to the nation throughboiler manufacturing”

The venerable Tsunekichi Takuma
commended as one of the ten great
inventors of Japan during the Meiji andTaisho periods (1868–1926)

The venerable
Tsunekichi Takuma

Amagasaki Factory

1940
1942

Permits and registrations

Operation begins at Harima Factory
1949
9 9

1949
9 9

Head Office, branch offices and other business offices
Construction license (Minister of Land, Infrastructure, Transport and Tourism license, Special 27-6129)
Construction consultant registration (Minister of Land, Infrastructure, Transport and Tourism registration, Construction 26-10202)
First-class architect office registration (01A02903)
ISO 9001 quality management system certification
Harima Factory
ISO 9001 quality management system certification
ISO 14001 environmental management systems certification
Manufacture of thermal equipment for power generation (Ministry of Economy, Trade andIndustry)
Permission to manufacture boilers and pressure vessels, permission to manufacture cranes
JQA-1952
JQA-EM0313
ISO 9001
ISO 14001(Ministry of Health, Labour and Welfare)certification
certification
Manufacture of specific high-pressure gas facilities (Ministry of Economy, Trade and Industry)
Head Office, Osaka Office,Harima FactoryTokyo Branch, Chubu Branch,
Manufacture of refrigerators (Governor of Hyogo Prefecture)

Company listed on the Osaka andTokyo stock exchanges

Bagasse fired boiler, the first product of its kind in theindustry, exported

Kyushu Branch, Hokkaido Branchand Harima Factory

Harima Factory under construction

1950
1953

1958

Head Office moved to Osaka’s Kita-ku District

Business expanded into the environmental facility sectors,
including waste incineration and water treatment plants
1960

1962

1963

Operation begins at Kyoto Factory（Current: Nippon Thermoener Co.,
Ltd. Kyoto Factory）

Japan’s first waste incineration plantdelivered
Sewerage treatment facility delivered
Japan’s first waste incineration plant

1970
1972
9

1975
9 5

Company renamed Takuma Co., Ltd.

Bulk production begins on “vacotinheater”, the world’s first vacuum-type hotwater heater

Corporate structure (as of June 28, 2017)

Vacotin heater

1980
1986

The first overseas delivery of a waste treatment facility
completed (U.S.A.)

Internal Audit Dept.
1990

Compliance & CSR Promotion Div.
Corporate Service Div.
Corp. Planning & Administration Div.
Committee of
Executive Officers
Board ofDirectors

President

Audit & Supervisory
Committee
Audit & Supervisory
Committee’s Office

1992
99

1992

New Company Motto instituted: “Value Technology,
Value People, Value the Earth”

The first delivery of a waste energy treatment facility
completed in Taiwan（Nei-Hu, Taipei City）

1995

Amagasaki Head Office Building completed
Corporate Marketing Group

1997

Environmental Plant Div.

1998

ISO9001 certification obtained

Administration Div.

Head Office

Japan’s largest Energy from Waste
plant delivered(Tokyo Shinkoto Waste Treatment
Plant capacity: 1,800 tons per day)1999

ISO14001 certification obtained for our Harima Factory
Energy Plant Div.

2000

International Operations Div.
Engineering Group

2005

2005

Takuma Hanyokikai Co., Ltd., a subsidiary
involved in the manufacture and sale of small
boilers, and Ebara Boiler Co., Ltd., merged
and renamed Nippon Thermoener Co., Ltd.

The first delivery of a waste energy
treatment facility completed in
China（Tianjin City）

Management Center

2010
2010
0 0

Technology Center

Energy from Waste plant deliveredin Europe (U.K.)

Project Center
Engineering Center2012
0 – 2013
02013

Construction Center
Harima Factory

3

TAKUMA 2017 ANNUAL REPORTHarima Factory

Operation of the Takuma Solar Power
Plant began (Harima Factory)

Installation and operation of temporary
incinerators to process disaster wastefrom the Great East Japan Earthquake

TAKUMA 2017 ANNUAL REPORT

4

The Takuma Group Network
3
4 9

19

11
27

10 6 17
7 22

21

14
24
25

16

29

10 1

8

20
12

2

13

23
26 15

5
1 2

28

18

Group companies in Japan
1 Nippon Thermoener Co., Ltd.

Manufacture and sale of a wide range of boilers andrelated equipment
Shirokanedai Bldg., 3-2-10 Shirokanedai,
Minato-ku, Tokyo 108-0071, Japan
TEL +81-3-6408-8251 FAX +81-3-6408-8278
http://www.n-thermo.co.jp/

4

2 Takuma Technos Co., Ltd.

Maintenance, management and operation of waste
treatment facilities, water treatment facilities andother facilities, as well as the design, installation andmanagement of various types of boilers, environmental
equipment and other equipment
10th Chuo Bldg., 1-5-6 Nihonbashi, Chuo-ku,
Tokyo 103-0023, Japan
TEL +81-3-3231-2911 FAX +81-3-3231-2917
http://www.takumatechnos.co.jp/

5

9

1

2

6

7

3

3 Hokkaido Sanitary Maintenance Co., Ltd.

Operation and maintenance of sewage treatment facilities
Daigo Bldg., 5-11, Ohdori Nishi, Chuo-ku,
Sapporo, Hokkaido 060-0042, Japan
TEL +81-11-221-8398 FAX +81-11-221-8542
4 Takuma Technos Hokkaido Co., Ltd.

Operation and maintenance of waste treatment facilities
Daigo Bldg., 5-11, Ohdori Nishi, Chuo-ku,
Sapporo, Hokkaido 060-0042, Japan
TEL +81-11-221-4128 FAX +81-11-221-1030

85 Sun Plant Co., Ltd.

Takuma’s business offices
1

Head Office

2-2-33 Kinrakuji-cho, Amagasaki, Hyogo
660-0806, Japan
TEL +81-6-6483-2609 FAX +81-6-6483-2751
http://www.takuma.co.jp
2

Osaka Office

Daiken Bldg., 2-3-20 Tsukamoto, Yodogawa-ku,
Osaka 532-0026, Japan
TEL +81-6-6100-3301 FAX +81-6-6100-3302

Overseas group companies
6

Chubu Branch

Daitokai Bldg., 3-22-8, Meieki, Nakamura-ku,
Nagoya, Aichi 450-0002, Japan
TEL +81-52-571-5211 FAX +81-52-581-3005
7

Kyushu Branch

Yakuin Business Garden, 1-1-1 Yakuin, Chuo-ku,
Fukuoka 810-0022, Japan
TEL +81-92-717-2828 FAX +81-92-717-2830
8

Okinawa BranchCommons Bldg., 1-11-12 Mashiki, Ginowan,
3 Tokyo Branch
Nomura Higashi-nihonbashi Bldg., 1-1-7 Higashi- Okinawa 901-2224, Japan
TEL +81-98-898-6650 FAX +81-98-898-6657
nihonbashi, Chuo-ku, Tokyo 103-0004, Japan
TEL +81-3-5822-7800 FAX +81-3-5822-7888 9 Harima Factory
1-2-1 Shinhama, Arai-cho, Takasago, Hyogo
4 Hokkaido Branch676-8540, Japan
Daigo Bldg., 5-11, Ohdori Nishi, Chuo-ku,
TEL +81-79-443-6511 FAX +81-79-443-6599
Sapporo, Hokkaido 060-0042, Japan
TEL +81-11-221-4106 FAX +81-11-241-0523 10 Taipei Branch
7F., No.16, Lane 35, Jihu Rd., Neihu District,
5 Tohoku Branch
NMF Sendai Aoba-dori Bldg., 2-1-2 Ichibancho, Taipei 114-92, Taiwan
Aoba-ku, Sendai, Miyagi 980-0811, Japan
TEL +886-2-8752-3838 FAX +886-2-2656-0584
TEL +81-22-222-3042 FAX +81-22-225-6759

5

TAKUMA 2017 ANNUAL REPORT

1Taiden Environtech Co., Ltd. (Taiwan)

Maintenance of waste treatment and otherfacilities
7F., No. 16, Lane 35, Jihu Rd., Neihu District,Taipei 114-92, Taiwan
TEL +886-2-2659-7137 FAX +886-2-2656-0584
2

Siam Takuma Co., Ltd. (Thailand)

Sale of energy and environment-related plants,
sales of parts for the same plants and after-sales
service
77/53 Sinn Sathorn Tower, 15th Floor,
Krungdhonburi Road, Klongtonsai, Klongsarn,
Bangkok 10600, Thailand
TEL +66-2-4385616 FAX +66-2-4400114

Design, construction and superintendence of
air-conditioning equipment, feed-water/drainage
sanitation equipment, and electrical equipment
Nomura Higashi-nihonbashi Bldg., 1-1-7 Higashinihonbashi, Chuo-ku, Tokyo 103-0004, Japan
TEL +81-3-5825-0921 FAX +81-3-5825-1631
http://www.sunplant.co.jp/
6 Takuma Engineering Co., Ltd.

Design of environmental equipment plants and energy plants
Takuma Bldg., 2-2-33 Kinrakuji-cho, Amagasaki,
Hyogo 660-0806, Japan
TEL +81-6-6487-4820 FAX +81-6-6487-4829
http://www.takuma-eng.co.jp/
7 Takuma System Control Co., Ltd.

Design of electrical instrumentation equipment, including
environmental equipment plants and energy plants
Takuma Bldg., 2-2-33 Kinrakuji-cho, Amagasaki,
Hyogo 660-0806, Japan
TEL +81-6-6487-4830 FAX +81-6-6487-4839
http://www.takuma-sc.co.jp/

10 Kankyo Sol-Tech Co., Ltd.

Analyzing and measurement for environment-related issues,
including water quality, exhaust gas and soil pollution
1-2-1 Shinhama, Arai-cho, Takasago, Hyogo
676-0008, Japan
TEL +81-79-443-6508 FAX +81-79-443-6510
http://www.k-soltech.co.jp/
11 Campo Recycle Plaza Co., Ltd.

Municipal solid waste and industrial waste treatment services
1 Takayanishitani, Sonobe-cho, Nantan, Kyoto
622-0032, Japan
TEL +81-771-68-3636 FAX +81-771-68-3639
http://www.c-rp.co.jp/
12 Nagaizumi High Trust Co., Ltd.

Facility upgrading, operation and maintenance ofmunicipal solid waste final disposal sites
374-12 Higashino, Nagaizumi-cho, Suntou-gun,Shizuoka 411-0931, Japan
TEL +81-55-989-2268 FAX +81-55-987-9935
http://www.nagaizumi-ht.jp/
13 Fujisawa High Trust Co., Ltd.

Operation and maintenance management of municipal
solid waste treatment facilities
2168 Ishikawa, Fujisawa, Kanagawa 252-0815, Japan
TEL +81-466-45-5411 FAX +81-466-45-5454
14 Iwate-Kenpoku Clean Co., Ltd.

Municipal solid and industrial waste treatment services
48-34, Dai 20 Chiwari, Esashika, Kunohe-mura,
Kunohe-gun, Iwate 028-6505, Japan
TEL +81-195-42-4085 FAX +81-195-42-4550
http://www.iwate2cln.co.jp/
15 Hitachinaka-Tokai High Trust Co., Ltd.

Operation and maintenance management of municipal
solid waste treatment facilities
103-2 Shinkocho, Hitachinaka, Ibaraki 312-0005, Japan
TEL +81-29-265-5371 FAX +81-29-265-5372
http://hitachinaka-tokai-ht.com/
16 Anan High Trust Co., Ltd.

Operation and maintenance management of municipal
solid waste treatment facilities
1-5 Kokatsu, Tachibana-cho, Anan, Tokushima779-1631, Japan
TEL +81-884-49-5823 FAX +81-884-49-5824
http://www.ecopark-anan.com/
17 Takuma Energy Co., Ltd.

8 Dan-Takuma Technologies Inc.

Power retail business
Takuma Bldg., 2-2-33 Kinrakuji-cho, Amagasaki,
Hyogo 660-0806, Japan
TEL +81-6-6487-4870 FAX +81-6-6483-2794

9 Kyoritsu Setsubi Co., Ltd.

Operation and maintenance management of amunicipal solid waste treatment facilities
2225 Hacchojima, Miyanojin-machi, Kurume,
Fukuoka 839-0805, Japan
TEL +81-942-27-7490 FAX +81-942-27-7491
http://www.kurume-ht.com/

Manufacture and sale of clean equipment, cleaning
equipment, chemical filters, clean rooms, drying
equipment and thermal chambers
3-12-16 Iwadokita, Komae, Tokyo 201-0004, Japan
TEL +81-3-3488-1111 FAX +81-3-3488-1118
http://www.dan-net.com/
Design, construction and superintendence of waste
treatment facilities, mechanical equipment of sewage
treatment facilities, and boiler plants for general industries
5-1-38 Yurigahara, Kita-ku, Sapporo, Hokkaido
002-8081, Japan
TEL +81-11-770-2811 FAX +81-11-770-2822

18 Kurume High Trust Co., Ltd.

19 Hokutan High Trust Co., Ltd.

Operation and maintenance management of amunicipal solid waste treatment facilities
943 Booka, Takeno-machi, Toyooka, Hyogo
669-6331, Japan
TEL +81-796-21-9111 FAX +81-796-21-9112
http://www.hokutan-ht.com/

20 Suwako High Trust Co., Ltd.

Operation and maintenance management of amunicipal solid waste treatment facilities
4769-14 Uchiyama, Okaya, Nagano 394-0055,
Japan
TEL +81-266-78-1590 FAX +81-266-78-1591
http://www.suwako-ht.jp/
21 Energy Mate Co., Ltd.

Sale of cogeneration systems and systems for thegeneration equipment of the same and total service
for onsite energy systems for consumer use
Midosuji Daiwa Bldg., 3-6-8 Kyutaromachi,
Chuo-ku, Osaka 541-0056, Japan
TEL +81-6-6241-6200 FAX +81-6-6241-6210
http://www.energy-mate.co.jp/
22 Takuma Plant Service Co., Ltd.

Maintenance of a wide variety of boilers andenvironmental facilities
2-2-27 Kinrakuji-cho, Amagasaki, Hyogo
660-0806, Japan
TEL +81-6-6488-8434 FAX +81-6-6488-0300
http://www.takuma-ps.com/index.html
23 Biopower Katsuta Co., Ltd.

Wood biomass power generation business
1974-1 Koya, Hitachinaka, Ibaraki 312-0002,
Japan
TEL +81-29-270-3341 FAX +81-29-270-3343
24 Kashihara High Trust Co., Ltd.

Operation and maintenance management of municipal
solid waste treatment facilities
1038-2 Kawanishi-cho, Kashihara, Nara
634-0826, Japan
TEL +81-744-26-6227 FAX +81-744-26-6228
25 Tochigi High Trust Co., Ltd.

Industrial waste treatment services
18-3 Kinugaoka, Moka, Tochigi 321-4367, Japan
TEL +81-285-83-3966 FAX +81-285-83-6500
http://www.t-hitrust.co.jp/
26 Katsuta Co., Ltd.

Industrial waste and municipal solid waste treatment
services
1968-2 Koya, Hitachinaka, Ibaraki 312-0002, Japan
TEL +81-29-270-3711 FAX +81-29-270-3712
http://www.eco-katsuta.com/
27 R.B.N. Co., Ltd.

Municipal solid waste, including waste home
appliances and office automation equipment, andindustrial waste treatment services
3059-20 Nakajima, Shikama-ku, Himeji, Hyogo
672-8035, Japan
TEL +81-79-243-1200 FAX +81-79-243-1202
28 Ichihara New Energy Co., Ltd.

Industrial and municipal solid waste treatment services
733 Mandano, Ichihara, Chiba 290-0549, Japan
TEL +81-436-50-8300 FAX +81-436-50-8400
http://www.ichihara-new.com/
29 Ecos Yonezawa Co., Ltd.

Final disposal of industrial waste
7028-1 Yanazawa, Yonezawa, Yamagata
992-0077, Japan
TEL +81-238-39-4050 FAX +81-238-39-4051
http://www.ecos-y.co.jp/

TAKUMA 2017 ANNUAL REPORT

6

Financial Highlights

Trend in Principal Management Indicatorsof( Millions
)
yen

of
of
( Millions) ( Thousands
yen
U.S. dollars )March 2012

March 2013

March 2014

March 2015

March 2016

March 2017

¥ 101,015¥ 96,384¥ 96,334¥ 103,875¥ 113,088¥ 116,309()

150,000

March 2017

120,000
90,000$1,036,717

60,000Operating income

¥

6,429

¥

6,241

¥

8,424

¥

8,223

¥

9,189

¥ 10,974$(inofmillions
yen )120,000

90,00060,00097,81530,00030,000Ordinary income
Profit attributableto owners of parent
Comprehensive
income

¥
¥

7,336
4,212

¥
¥

7,168
6,145

¥
¥

9,449
8,835

¥
¥

9,116
8,030

¥
¥

9,646
7,817

¥ 11,606¥

8,551$ 103,446$

00Fiscal year
year

76,217th 109th 110th 111th 112th 113th
108
,
,
,
,
,
,
12
13
14
15
16
17

Fiscal year
year

Operating income
¥

4,935

¥

6,712

¥

9,935

¥

9,398

¥

7,149

¥

9,937

$

88,569in millionsof yen(116,309of( Millions)
yen

113,088of( Millions)
yen

Net sales

103,875

of( Millions)
yen

in millionsof yen96,334of( Millions)
yen

Value of orders received

96,384113th

101,015113th

191,026112th

99,919111th

113,763

Net sales

110th

148,025

End of fiscal year

109th

109,237

Fiscal year

108th

90,362

Trend in Principal Management Indicators and Other Financial Datath 109th 110th 111th 112th 113th
108
,
,
,
,
,
,
12
13
14
15
16
17

Net sales composition ratios(FY2016))

5.7%

12,000¥ 58,809¥ 67,727$ 603,682

Total assets¥ 107,028¥ 106,754¥ 108,520¥ 123,127¥ 132,614¥ 140,201$1,249,675

10,0008,000¥ 339.20¥ 415.92¥ 527.50¥ 631.53¥ 708.18¥ 815.77$

7.27

Net income pershare (JPY or USD)¥¥

¥ 106.86¥¥¥ 103.43

$

0.92

6,429

6,000

Net assets per share(JPY or USD)

4,000

Overseas Environment
and Energy
Package Boiler

14.7%

1.9%

77.7%

Equipment and System
Business

2,000

50.94

74.32

97.12

94.55

0

42.4

44.1

48.1

48.1

Trend by Segment
Domestic Environment and Energy

13.6

13.6

Price-to-earnings
ratio

8.1

7.4

6.9

9.7

10.7

10.5

10.5

Cash flows fromoperating activities¥

Cash flows frominvesting activities

¥

4,565
270

¥ 17,465
¥

(59)

¥
¥

8,270
(1,430)¥ 21,727
¥

(160)

¥
¥

6,728
(445)

¥
¥

9,590
143

$
$

85,483(inofmillions
yen )140,000

8,898

11,727(

9,834

70,000

1,273

163,505

14.1

3,288

(5,867)¥ 27,030
3,315¥(3,707)¥ 45,008
3,266¥(2,900)¥ 48,335
3,366¥(1,787)¥ 57,132
3,447$(15,930)$ 509,247
3,447

Note:
1. U.S. dollar amounts are shown solely for the convenience of readers and are translated at the rate of ¥112.19 to U.S.$1.00, the exchange
rate prevailing at March 31, 2017.
2. Ordinary income is a measure of accounting profit that equals operating income plus other income minus other expenses, except for
extraordinary items under Japanese GAAP.

2,500(inofmillions
yen )Net sales
Value of orders received

Operating in millions
incomeof yen

(

0

)

500

th
Fiscal year 111
,
year
15

Operating in millions
incomeof yen(20,00010,000Net sales
Value of orders received

(154)

(223)

0

–500

th
112
,
16

th
113
,
17

Equipment and System Business

898

896

)

(inofmillions
yen )

2,000

10,000

1,000

5,000

917

Net sales
Value of orders received

th
Fiscal year 111
,
year
15

0
th
112
,
16

th
113
,
17

Operating in millions
incomeof yen

(

)

1,000

45
0

TAKUMA 2017 ANNUAL REPORT

5,000

Package Boiler

16,724

3,187¥ 26,005

¥

5,000

th
113
,
17

17,165

Number of
employees(8,887)

16,450¥ 17,384¥

16,390End-of-year balanceof cash and cash
equivalents(2,494)

16,653

¥

th
112
,
16

(inofmillions
yen )10,0000th
Fiscal year 111
,
year
15

16,604

Cash flows fromfinancing activities)

2

90,64316.8

75,60922.7

88,494

19.7

Operating in millions
incomeof yen88,004

16.3

Overseas Environment and Energy

Net sales
Value of orders received

79,962Return on equity
(%)

3,070

40.2

8,041

32.2

2,222

26.2

6,666

Capital adequacy
ratio (%)

th 109th 110th 111th 112th 113th
108
,
,
,
,
,
,
12
13
14
15
16
17

861

−

7,331

−

830

−

7,663

−

2,203

−

7,139

−

1,407

−

6,147

Diluted net income
per share (JPY or USD)

Fiscal year
year

0

7

Domestic Environment
and Energy

10,974¥ 52,516

9,189¥ 43,889

8,223¥ 34,653

8,424¥ 28,308

6,241

Net assets

351

322

th
112
,
16

th
113
,
17

0

0
th
Fiscal year 111
,
year
15

500

TAKUMA 2017 ANNUAL REPORT

8

Message from Top Management

Achieving sustained growth by resolving social issues andincreasing corporate value through CSR management■ Business policies
Takuma’s Management Principles state that the company will strive for “social contribution, corporate valueenhancement, long-term corporate development, and thesatisfaction of all stakeholders by providing goods andservices that are needed and recognized as valuable insociety.”
In keeping with this philosophy, we have identified two
goals: first, continuing to play an essential role for society
as a leading company in the utilization of renewable energy
and in the field of environmental protection; and second,of achieving ordinary profit of JPY 10.0 billion in FY2020 as
our target level of ordinary profit. Similarly, we haveembraced a corporate vision of building structures capableof earning JPY 10.0 billion in profit or more in a stable andconsistent manner even as the business environment
continues to undergo dramatic change, and we are
pursuing a series of business activities in pursuit of thatvision. We will achieve this vision not through thestandalone efforts of the company, but as the result of the
combined capabilities of the entire Takuma Group. To that
end, we have adopted a basic management policy of
maximizing profits in our consolidated financial accounting
and of increasing corporate value.
The Group will work diligently to implement the 11th
Medium-Term Management Plan (FY2015 to FY2017) in aneffort to build on past results to enhance its business sothat it can achieve sustained growth, both in terms of
quality and quantity.

dioxide emissions through high-efficiency generation ofelectricity using biomass promise to make a significant
contribution to the resolution of social issues, and I believethat they will also serve to facilitate the growth and development of the Group’s businesses.

■ Implementing CSR management andachieving sustained growth

Companies must continuously build mechanisms forcreating new value while maintaining good, long-term
relationships with a variety of stakeholders, including
customers, business partners, employees, shareholders,and investors. To do so, it is essential to demonstrate anability to act in a way that earns stakeholders’ trust. To that
end, we will continue to pursue management activities in asocially just and ethical manner, to take into accountenvironmental and human rights considerations, and toadvance corporate governance, compliance, and risk
management, which comprise the foundation on which
the company’s activities are carried out.

The Takuma Group has established its Company Motto,
Management Principles, Takuma Group Ethics Charter, andTakuma Group Code of Conduct as the foundation for CSR
management, and we strive to put them into practice. We
believe that we can resolve social issues, increase corporate
value, and achieve sustained growth by cultivating ahealthy and robust corporate culture and ensuring that theGroup’s executives and employees each maintain a highlevel of CSR awareness and incorporate that awareness into
their business activities.
Takuma has been a signatory to the United Nations
Global Compact since 2006, and we support its 10
fundamental principles in the 4 areas of human rights,
labour, environment, and anti-corruption. We will work todevelop our business while understanding and respecting
these globally shared principles.
We at the Takuma Group encourage readers to offer
their candid views and advice, which we will carefully
review in order that we might better resolve social issues
and contribute to the sustained development of society.

July 2017

Takaaki Kato

■ Business environment
We expect to see continued demand for our principal
businesses thanks to increased environmental awareness;
progress in initiatives to prevent global warming andconserve resources and energy; planned replacement of,and updates to, outdated facilities operated on behalf of
local governments; and energy policies that incentivize
biomass-fueled power plants, for example feed-in-tariff
programs for power generated using renewable energy.
In addition, adoption of the Paris Agreement at theUnited Nations Climate Change Conference (COP 21) andof Sustainable Development Goals (SDGs) at the United
Nations Sustainable Development Summit provides milestones along the path to a sustainable society. Takuma’s
technologies for processing waste and reducing carbon
9

TAKUMA 2017 ANNUAL REPORT

President and CEO
Takuma Co., Ltd.

The Takuma Group has joined the United Nations Global Compact (UNGC), which is a voluntary effort to create a
global framework for implementing sustainable growth by having companies and groups exercise responsible andcreative leadership while acting as good members of society.
Reference: UN Global Compact http://www.unglobalcompact.org/
Network JapanWE SUPPORTTAKUMA 2017 ANNUAL REPORT

10

Takuma Group 11th Medium-Term Management Plan — An Overview (FY2015 – 2017)— Achieving Sustained Growth
Company Motto

Value Technology, Value People, Value the Earth
1 Business Directions① Positioning of the 11th Medium-Term Management Plan

Management Principles
Takuma will strive for social contribution, corporate value enhancement, long-term corporate
development and the satisfaction of all stakeholders by providing goods and services that areneeded and recognized as valuable in society.

Achieve sustained growth by targeting growth markets while maintaining and expanding our market position in the EPC
business and using businesses that generate base profits as a foundation for growth.
∗ EPC: Plant engineering, procurement, and construction
Profit(illustration)

The founding spirit of Takuma was “Service to the nation through boiler manufacturing”∗ which in present-day languagemeans “contribution to society by supplying goods and services that we yield.” This spirit can also be applied to theconcept of Corporate Social Responsibility (CSR) that in recent years has become a vital issue for corporate management.
The management principles of the Takuma group companies are all based on the said founding spirit.

Maintenance and expansionof our market positionin the EPC business∗ Service to the nation through boiler manufacturing
It was the Company Motto of Takuma, then Takuma Boiler Manufacturing Co., Ltd., founded by Mr. Tsunekichi Takuma, one of the ten great
inventors of Japan during the period of Meiji and Taisho (1868–1926).

Takuma Group Ethics Charter(

Fields that are prone to theeffects of national policies
and the business environment

Takuma and the Takuma Group companies believe that it is essential for the sound development of the group that all of
the directors and employees remain aware of our social responsibilities and the circumstances surrounding us as well as
act in response to social ethics complying with applicable related laws and ordinances. Bearing the above in mind, we
have established and will promote this ethics charter as our code of conduct, aiming to realize our management
principles.

EPC

Waste treatment plants,
boiler plants, andwater treatment plants

)

(

c.
erseas markets, et
New products, ov

Initiatives targeting
growth markets

Operation and maintenanceWaste treatment plants,
boiler plants, andwater treatment plants

ducts
d pro
elope
v
e
d
Newly

)

Improvement ofbase profits
Time

Package boilers, Equipment and systems
1. We shall strive for proactive social contribution while establishing a harmonious coexistence with the global
environment as good corporate citizens.
2. We shall act in good faith in accordance with sound business custom, while complying with applicable laws andregulations and committing ourselves to fair, transparent and free competition, as well as conducting lawful
business activities.
3. We shall never have any relationship with antisocial forces or organizations, which may pose a threat to thesocial order and security of civil society.
4. We shall respect fundamental human rights and never practice discrimination.
5. We shall strive to provide high quality products and services, based on our advanced technologies, to attain highacclaim and confidence from our customers.
6. We shall strive to disclose corporate information to shareholders and investors through investor relations (IR) andother activities on a timely and equitable basis.
7. We shall strive to protect corporate properties as well as information, while never using either for improprieties or
any unjustifiable purpose other than normal business operations.

Profitability throughselection and concentrationof resources

Reinforcement of businessfoundation for stability
and profitability

Achieving sustained
growth (11th Medium-Term
Management Plan)

FY2009 – FY2011

FY2012 – FY2014

FY2015 – FY2017② Principal business domains
Enhance our businesses in terms of both quantity and quality by expanding on-site maintenance and management service,competitive product development, and regional reach around the existing EPC business.

Waste Treatment Plant BusinessO&M and equipment
sale market

Takuma Group Code of Conduct

Practice of compliance with laws and ordinances
as well as sound economic activities
4. Free competition and fair trade
5. Relationship with politics and public administration
6. Policies concerning business entertainment andgift-giving
7. Prohibition of involvement in anti-social activities
8. Appropriate export and import transactions

Making appropriate disclosure of information
14. Transmission of corporate information
15. Ensuring reliability of financial report
16. Prohibition of insider trading

Respect for basic human rights
9. Prohibition of discriminatory actions
10. Respect for individuality, personal quality, and privacy
11. Safe work environment

11

TAKUMA 2017 ANNUAL REPORT

Operation & Maintenance∗ DBO:

BiogasplantsDesign Build Operate

DBO

Waste
treatment
plantsWater treatment
plants

Large and compositefuel boilers
Maintenance(Adding FIT customers)

EPC market

O&M∗ O&M:

Practice of customer satisfaction
12. Safety of products and services as well as ensuring
reliability
13. Policies concerning advertising

Boiler Plant Business

New products,
peripheral markets,
overseas markets
Overseas
markets

Harmony with society
1. Coexistence with the global environment
2. Coexistence with international society
3. Practice of social contribution activities

FY2018 and onwards

Indonesia,
Vietnam, etc.

Boiler plants(Japan, Thailand)
Package boilers
Southeast Asia

Sand filtration

Protection of corporate properties andinformation
17. Management and proper use of corporate properties
18. Handling of confidential information
19. Intellectual property protection

Equipment
renewal demand
Sludge-fueled
power generation

Water Treatment Plant Business

Maintenanceand chemicals

Eastern Europe

Developed products

Package Boiler Business
TAKUMA 2017 ANNUAL REPORT

12

Takuma Group 11th Medium-Term Management Plan — An Overview (FY2015 – 2017)

2 Policies and Perspectives of the 11th Medium-Term Management Plan
Policies

Creation ofcustomer value❶ Maintenance and expansion of market position in the EPC
business❸ Initiatives that target growth markets

M
mar aintenance and expansion of
ket position in the EPC business❹ Further enhancement of the company’s financial strength❺ Human resources management❻ Cultivation of a robust organizational culture

Leveraging
thecompany’s
totalcapabilities

Perspectives

Accommodation ofenvironmental
changes and risk
management

Ongoinginnovation❷ Expansion of businesses that generate base profits

4 Core Business Units and Emphasis of Future Activities❶ Creation of customer value❸ Accommodation of environmental changes and risk
management

Water Treatment Plant BusinessBusiness Environment

Business Environment●

As facilities age, there is ongoing robust demand for renewal
and service life elongation.
● DBO project volume is growing, and there is also growth in
O&M services for existing facilities.

●

Emphasis of Future Activities

Emphasis of Future Activities

Develop the foundation of the business and enhance ouroperational capabilities.
● Further strengthen initiatives to prolong the service life offacilities.

●●

Expansithat ge on of businesses
nerate base profits

DBO Project

Cultivation of a robust
organizational culture

Achieving sustained growth

3 Financial Targets (Consolidated)

Boiler Plant Business (Overseas)

Business Environment

Business Environment

Demand for biomass power plants remains steady.
● The number of plants targeted for maintenance is increasing
as facilities are completed and transferred to customers.

●

Emphasis of Future Activities●(Billion JPY)
400

3,000

300

2,000

200

1,000

100

0

9th Plan

10th Plan

Order Value(left scale)11th Plan

Sales(left scale)(Billion JPY)

10th Medium-Term
Management Plan results

Business Environment

Business Environment●

Plans to build Energy from Waste plants are underway invarious regions worldwide against the backdrop of ongoingurbanization and increasing environmental awareness.

Develop schemes for entering the market that are suited toeach country and region.
● Develop structures to facilitate market entry.
●

other income minus other expenses, except for extraordinary terms under Japanese GAAP.

Bagasse Fired Boiler Plant (Thailand)

Package Boiler Business

Emphasis of Future Activities∗ Ordinary income is a measure of accounting profit that equals operating income plus

The domestic market has matured, and it is not reasonable
to expect a significant recovery of demand.
● The need for boilers is increasing overseas, particularly indeveloping nations.
●

Emphasis of Future Activities●●

Expand our overseas business.
Enhance our technologies and production capacity.

11th Medium-Term
Management Plan targets

2009

2010

2011

Total

2012

2013

2014

Total

FY 2015 – FY 2017

Order
Value

70.5

97.0

90.4

257.9

109.2

148.0

113.7

371.0

(3-year cumulative total)

Sales

95.1

89.1

101.0

285.3

96.3

96.3

103.8

296.5

(3-year cumulative total)

Ordinary
Profit

2.0

4.4

7.3

13.7

7.2

9.4

9.1

25.7

(3-year cumulative total)

TAKUMA 2017 ANNUAL REPORT

Maintain and enhance functionality for carrying out overseas
projects, including enhancement of the functions of our
local subsidiary (SIAM TAKUMA).
● Enhance price competitiveness and differentiate products.

Waste Treatment Plant Business (Overseas)0

Ordinary Profit(right scale)

Demand for biomass power plants in Thailand and surrounding countries remains robust.

Emphasis of Future Activities

Wood Chip Biomass Power Plant (Miyazaki Prefecture)

Financial Target: Ordinary income∗ (FY 2020) 10 billion yen

13

Secure more orders for biomass power plants (secure market
position).
● Enhance maintenance service and capabilities.
●

4,000

Sludge-Fueled Power System Demonstration Plant

Boiler Plant Business (Japan)●

9th Medium-Term
Management Plan results

Secure our position in the market for tapping the energy
potential of sewage sludge.
● Expand our share in the advanced-treatment sand filtration
market.

Management
base

Human resources management

We are currently striving to build structures capable ofconsistently earning an ordinary profit of JPY 10 billion evenas the business environment undergoes a process of significant change in keeping with our corporate vision of“aiming to maintain our role of being an indispensable
presence in society as a leading company in the field of
renewable energy utilization and environmental protection”
and our target of achieving ordinary profit of JPY 10 billion
in FY2020.
To facilitate the achievement of the goals outlined in thisplan, we will undertake initiatives to realize sustained
growth in accordance with the policies while seeking tosteadily improve our business in terms of both quantity andquality. To that end, we have established the financial
targets described below.

There is a growing need to recover energy from sewage
sludge.
● Renewal demand and service life elongation demand areincreasing as facilities age.

Initiatives
that target
growth markets
Further enha ment of thencecompany’s
financial strength❷ Ongoing innovation

Municipal Solid Waste Treatment Plant Business

400Billion JPY
360Billion JPY
27Billion JPY

Energy from Waste Plant (Beijing, China)

Once-through boiler

Hot Water boiler

TAKUMA 2017 ANNUAL REPORT

14

Business Development

1. Activities of Our Municipal Solid Waste Treatment
Plant Business
A leading company in the industry

1 Plant construction

Since completing Japan’s first fully continuous mechanical waste incineration plant in 1963, Takuma has built more than
350 waste incineration plants in the country, more than any other company in the industry.
We have consistently led the municipal solid waste treatment industry, for example by starting operation of Japan’s firstcombined facility comprised of waste incineration and biogas recovery plants and building numerous high-efficiency wastefueled power plants.
Takuma will continue to contribute to the realization of a recycling-based society as the industry’s leading company.

Stoker-type incinerators
Most Energy from Waste plants use stoker-type incinerators. Takuma has been delivering stoker-type incinerators tocustomers for half a century, allowing us to accumulate a variety of expertise in areas such as stable combustion, exhaust gas
treatment, and waste-fueled power generation.
Based on this well-established base of technological capability, we build and supply highly efficient waste treatment
systems by integrating the latest technologies, for example water-cooled stokers, proactive combustion control, exhaust gas
recirculation systems, and furnace denitration and urea decomposition systems.
Steam

2

Filter-type
dust collector

Steam turbine
BoilerLaser H2O
meter

Technologies for increasing
power generation
Technologies for lowering
life cycle cost

Exhaust gas

4Incinerator
Catalyzer

Combined facility comprised of waste incineration andbiogas recovery plants(Delivered in 2013 to Nantan Regional Administrative Association)

High-efficiency waste-fueled power plant(processing capacity: 163 tons per day)
(Delivered in 2016 to Kurume City)

6

Exhaust gas
circulating
fan

1

5
Stack

3
Water-cooled stoker +1 high-temperature/high-pressure boiler●●

This design increases the stocker’s cooling performance
to facilitate stable combustion of high-calorie waste.
It also increases the boiler’s steam conditions to improve
power generation.

Exhaust gas recirculation

5 Fly ash circulation system

3 system●

Generation of harmful substances isdramatically reduced by stirring andmixing exhaust gases with hot
circulating gases in the incinerator.

●

2 Proactive combustion control●

Fly ash captured by the filter-type
dust collector is circulated, allowing
effective use of unreacted chemical
agents in the fly ash.

Catalyst regeneration

6 system●

Maintenance costs can be dramaticallyreduced by regenerating catalysts
without removing the catalyst from theassociated equipment.

4 Furnace denitration and urea decomposition system

This technology utilizes a laser H2O meter to implement real-time monitoring of waste characteristics
based on the concentration of moisture in combustion gases. Combustion is subject to proactive
control based on waste characteristics to maintain extremely stable combustion conditions.

●●This system ingests ammonia into the incinerator to reliably eliminate nitrogenoxides.
Life cycle cost is lowered by generating ammonia from urea at the facility.

Biogas recovery plants
High-efficiency waste-fueled power plant(processing capacity: 600 tons per day)

(Delivered in 2014 to the Clean Authority of Tokyo)

High-efficiency waste-fueled power plant(processing capacity: 110 tons per day)

(Delivered in 2016 to the Neighborhood of the Lake Administrative Affairs Association)

From construction to after-sales service
Takuma’s municipal solid waste treatment plant businessconsists of four components: plant construction, primaryequipment improvement, maintenance, and long-term
turnkey operation.
In each area of operations, we draw on technologicalcapabilities and expertise based on our extensive experienceto precisely meet the needs of local governments, regions,and society, allowing us to offer facilities that are
welcomed by their communities.

Recently the Ministry of the Environment has been encouraging the introduction of biogas recovery plants for use withmunicipal solid waste. This is an area where Takuma is helping further lower CO2 emissions with a combined system of
methane fermentation and incineration for municipal solid waste to recover the maximum amount of energy from the waste
treatment and utilize it in high-efficiency power generation. (The system received the New Energy Foundation’s Chairman Award at the FY2014
New Energy Awards.)

Needs ofsociety

Combustible
waste

Needs oflocal
governmentsgogMethanegas
Methanefermentation tankFermentation
residue

Needs offiees
escommunities

Plastics, etc.
Takuma technologies
Takuma’sand expertise

Sorting system

Electric powercompany
Electricity
generation

Steam turbine
generator
Exhaust gas
treatment
systemIncinerator and boiler

TAKUMA 2017 ANNUAL REPORT

Gas-powered
generator

Steam

Exhaustgas

Facilities that are welcomed by their communities

15

Electricity
generation

Garbage
Wet paper

New EnergyAwardsStack

New Energy
Foundation’s
ChairmanAward

TAKUMA 2017 ANNUAL REPORT

16

Business Development

Activities of Our Municipal Solid Waste Treatment Plant Business2 Primary equipment improvements

3 Maintenance

Implementing high-value-added renovations

Ensuring stable waste treatment

Although waste treatment plants are required to operate over extended periods of time, equipment must be renovatedonce 20 or more years has passed since the plant began operating. In addition, changes in the regulatory environment andsociety sometimes make large-scale renovations necessary.
Takuma draws on the sophisticated heat utilization technologies and energy-saving technologies it has accumulated as aboiler and environmental plant manufacturer to carry out high-value-added and large-scale renovation projects. In this way,
we are able to help extend facilities’ service life while lowering CO2 emissions.

Annual maintenance is essential in order to ensure stable operation of waste treatment plants. However, maintenancedemands both sophisticated technological capabilities and experience, both because waste treatment plants draw on a range ofexpertise and because the manner in which their equipment deteriorates over time varies with the properties of the waste they
process. Takuma takes maximum advantage of its accumulated expertise to contribute to stable waste treatment and long-term
facility operation by developing long-term repair plans, carrying out elaborate site investigations, and then performing
maintenance that has been optimized in terms of both timing and content.

Installation of
inverters on cranes●

Reducing power by installing
speed control-type inverters

Improvement ofheat recovery

Improvement of steam turbine capacity

Installing boilers on
water-injection furnaces● Expanding boilers’ heating surface

Improving generating capacity by increasing steam intake capacity andoptimizing design features● Improving the capacity of steam condensers●●

Repairing an incinerator’s refractory

Measuring the thickness ofboiler water tubes

Maintaining a conveyor

4 Long-term turnkey operation business
Steam

G

High-quality facility operation using

Steam turbine
Waste crane

Steam condenser

Quenching tower

Our long-term comprehensive operation business, in which we offer contract operation, maintenance, and management services
over a period of 10 to 20 years, has been growing in recent years. As of May 2017, the Takuma Group operates 16 facilities.
We are working to increase the quality of our operation, maintenance, and management services by progressively deploying, a system that we developed during FY2016, at the facilities we operate.
makes it possible to achieve evenmore stable operation by analyzing enormous volumes of accumulated data, for example to facilitate more sophisticated: Plant Optimization Comprehensive Support System)
automatic combustion control. (∗Filter-type
dustcollector

Boiler∗, a comprehensive support system for operation, maintenance, and management

Incinerator

Induceddraft fan

Operated facility

Stack

Ash conveyor

Operating data●●

Adoption ofhigh-efficiency motors

Enhancement of combustion equipment efficiency
Improving stable combustion by changing furnace shape and stabilizing
the volume of steam generation and power generation● Reducing the volume of exhaust gases and increasing the volume ofheat recovery by adopting low-air-ratio combustion technology●●

Reducing power use by adopting
high-efficiency motors

Installation of
inverters on fans●

Reducing power use by installing
speed control-type inverters

Takuma Head Office

DCS continuous operation data
DCS graphical display monitoring

Aggregationof data

Inspection data●●

Daily inspection records
Measurement and analytical data

Comprehensive Support Center

Maintenance data
Functional diagnostics and inspection
records● Maintenance history data●

Increasing the quality of our operation,
maintenance, and management services
Implementation of safe and sophisticated operation
Streamlining of maintenance and management● Optimization of utility use and power income/expenditures●●

Examples of primary equipment improvement works
17

TAKUMA 2017 ANNUAL REPORT

integrated server
Utilizationof systemfunctionality
and provision oftechnical support

Central management and accumulation of a range of data types
Statistical analysis of data andmachine learning● Evaluation of equipment
performance and failure prediction● Visualization of service level andstudy of reductionsetc.
●

conceptual diagram
TAKUMA 2017 ANNUAL REPORT

18

Business Development

2. Activities of Our Energy Plant Business—Transforming a variety of biomass resources into fuelTechnologies and experience in using a broad range of biomass fuels
Since its founding, Takuma has enhanced its technological capabilities as a pioneering boiler manufacturer to deliver a
total of more than 600 boilers designed to accommodate a wide variety of biomass fuels in Japan and overseas.
Going forward, we will continue to actively pursue development and improvement of technologies for effectively using
energy in a way that gives priority to both humankind and the planet while simultaneously meeting customer needs.

Social landscape
The Great East Japan Earthquake of 2011 threw the safety of nuclear power plants into question and led many tobegin focusing on “renewable energy,” which is characterized by a low environmental impact, as an alternative sourceof energy. Biomass-fueled power generation in particular promises beneficial ripple effects such as redevelopment of
the forestry industry and job creation as companies move to fill needs of fuel procurement, transport, and storage aswell as chip processing and other operations. Compared to solar and wind power, biomass also has the advantage ofbeing able to provide power in a relatively stable manner without being affected by weather. Currently, biomass-fueled
power plants are being planned and built in locations across Japan.

Delivery record of biomass boilers by area of Japan
Takuma is working on facilities that use biomass fuel throughout Japan.
● We have constructed facilities that use forestry-derived

biomass fuels such as thinned timber and waste fromlumber plants and industry-derived biomass fuels suchas plant waste and sludge from manufacturing plants inmany regions.

Hokkaido Region
Wood fuel: 11 plants● We have constructed many facilities in Japan that use

livestock-derived biomass fuels such as chicken and cattle
manure and agriculture-derived biomass fuels such as
bagasse (fiber remaining after sugarcane is crushed andsugar extracted), particularly in Kyushu and Okinawa.

Tohoku Region

Wood waste-fired
boilerChubu Region

Wood fuel: 25 plants
Other fuel:3 plants

Wood fuel: 33 plants
Other fuel:Chugoku Region

Renewable energy

Kanto Region

Wood fuel: 28 plants

Wood fuel: 25 plants

Chicken manure-fired
boilerOther fuel:

Wood fuel: 22 plants
Other fuel:

Wood fuel: 20 plants
Other fuel: 48 plants

Wind

Hydro

3 plants

Shikoku Region
Wood fuel: 10 plants

Geothermal

Paper mill sludge-fired
boilerBagasse-fired boiler

Biomass

9 plants

Kinki Region
Kyushu-Okinawa Regions

Solar

7 plants∗ “Other fuel” includes livestock manure, bagasse, miscellaneous plant waste, and sludge.
(as of March 31, 2017)

Forestry-derived biomass fuels

Debris from demolitionof wooden houses

Waste fromlumber plants

Thinned timber

Livestock-derived biomass fuels

Industry-derived biomass fuels

Paper sludge

Miscellaneous
plant waste

Agriculture-derived biomass fuels

Wood chip-fired power plant
The introduction of Japan’s feed-in-tariff system forrenewable energy is driving expectations for biomass power
generation to new levels.
Anticipating these developments, Takuma has deployed
numerous biomass power generation facilities and createda subsidiary with a wood biomass generation business to
procure biomass fuels from various regions while operating,
maintaining, and managing biomass power generation
facilities.

Powergeneration 4,990 kW

Fluidized
bed boiler

Chicken manure

Cattle manure

BagassePruned fruit
tree branches

Rice husksPower 4,300 kW
generator

Wood fuel supply
feederBag filter

Multicyclone
Hot air
generator

Induceddraft fan Stack
Ash humidifier

Vibrating screen
Sand silo

Wood fuelGas

Condenser

Economizer

Wood fuelpit
Forced draft fan

Subsidiary profile
Subsidiary Biopower Katsuta Co., Ltd., operates a biomassfired power generating plant located in Hitachinaka City in
Ibaraki Prefecture. All the electricity the plant generates(with the exception of what is used to power the plant
itself) is sold to the grid.

Powertransmission

SteamturbineAsh pit

Ash
Electricity

Steam
Water

Hot air
Air

Sand

Flowchart
19

TAKUMA 2017 ANNUAL REPORTTAKUMA 2017 ANNUAL REPORT

20

Business Development

Activities of Our Energy Plant Business—Pursuing biomass power generation

Biomass-fired power plants comprise one of our most skilled product areas. Activity in the segment has been sparked by
the prospect of stable profits made possible by the launch of Japan’s feed-in tariff system for renewable energy, and Takuma
has received orders for numerous plants.
We have also received multiple orders for boiler fuel conversion projects to provide electricity and steam for internal plantuse.
Power output scaleGreater than or equal to 10,000 kW
Greater than or equal to 2,000 kW
but less than 10,000 kW

Hanamaki Biomass Energy Co., Ltd.

Less than 2,000 kW

Tsugaru Biomass Power
Generation Co., Ltd.

Conversion to biomass fuelAkita Green Power Co., Ltd.
Mogami Biomass Power
Co., Ltd.
Ibuki Green Energy Co., Ltd.
Sanyo Paper MFG. Co., Ltd.

Ichinohe Forest Power Co., Ltd.

Matsue Biomass Power Co., Ltd.

Utthi Kawai Co., Ltd.
Pultec Energy Co., Ltd.

SARA Incorporated

SGET Green Power Sanjo
Godo Kaisha

Chugoku Mokuzai Co., Ltd.
Head Office Plant

Proposing combustion furnaces that can accommodate the fuels customers use
Step grate stoker

Traveling stoker

This combustion method,which derives from waste
incineration technology, canbe used to uniformly burnfuels with different calorificvalues, moisture content,
shapes, and sizes. Anothercharacteristic of this method
is that it requires less power
to operate (known as facility
power) than other types.

With a traveling stoker, fuel isdistributed in the furnace sothat longer combustion times
are secured for fuel withlarger volumes. As with astep grate stoker, combustion
is comparatively gradual, andthe system can accommodatea wide range of fuels withdifferent calorific values, moisture content, and shapes.

Installation example: Sendai Factory, Chuetsu
Pulp & Paper Co., Ltd.

Installation example: Ariake Green Energy Co., Ltd.

Chuetsu Pulp & Paper Co., Ltd. is a large general
paper manufacturer that manufacturers, processes,
and sells pulp and paper products.
The facility we delivered at the company’s Sendai
Factory uses a step grate stoker that can accommodate
biomass fuels with a variety of properties and shapes in
anticipation of the future diversification of fuels.
[Equipment overview]○ Location: Satsumasendai City, Kagoshima Prefecture○ Power output: 23,700 kW

Ariake Green Energy Co., Ltd. is a wood chip
biomass-fueled power plant operator established withinvestments by Ishizaki Inc.; Kyushu Biotech Co., Ltd.;and Matsumoto Mokuzai Co., Ltd.
This plant uses scrap lumber and other wood wastefrom lumber mills in Kumamoto Prefecture as well as
unused lumber such as wood from thinned trees asbiomass fuel. The business is expected to yield a variety
of benefits, including the revitalization of the forestry
industry and the local community through job creation.
[Equipment overview]○ Location: Arao City, Kumamoto Prefecture○ Power output: 6,250 kW

DS Green Power Generation
Yonezawa LLC.

Wood One Co., Ltd.
Kurihalant Co., Ltd.
Chugoku Mokuzai Co., Ltd.
Imari Factory

Rengo Co., Ltd., Yashio Mill
Fuji Seishi Cooperative

Ariake Co., Ltd.
No.2 Power Plant

Shin Tokai Paper Co., Ltd.
Shimada Mill

Ariake Green Energy Co., Ltd.

Gifu Biomass Power Co., Ltd.

Chuetsu Pulp & Paper Co., Ltd.
Sendai Factory
Chugoku Mokuzai Co., Ltd.
Hyuga Factory

SALA e POWER Co., Ltd.
Japan Farm Co., Ltd.

Biomass Power Technologies Inc.
Mie Ene Wood Co., Ltd.
Maniwa Biomass Power
Co., Ltd.
Tosa Green Power Co., Ltd.
Ehime Forest Generation, LLC∗ Biomass-fired power plants ordered during or after July 2012(as of March 31, 2017)21

TAKUMA 2017 ANNUAL REPORT

Bubbling fluidized bed

Circulating fluidized bed

Since sand that has been
fluidized by high-pressure air
burns away the surface of thechips, little unburned fuelremains, making high boiler
efficiency a characteristic of
fluidized bed systems. They
can accommodate a variety ofdifferent types of fuel, including fuels with high moisture
content.

Heated, fluidized sand burns
fuel as it circulates, keeping
temperatures inside thefurnace uniform to enablestable combustion. Since little
waste remains unburned,
boiler efficiency is high, andthe system can accommodate
a broad range of mixed fuelswith different caloric values.

Installation example: Hanamaki Biomass EnergyCo., Ltd.

Installation example: Hyuga Factory, Chugoku
Mokuzai Co., Ltd.

Hanamaki Biomass Energy Co., Ltd. is a wood chip
biomass power plant operator established by a group ofinvestors led by Takeei Corporation.
This plant makes effective use of unused lumber suchas wood from thinned trees from Iwate Prefecture’s lush
forests and lumber damaged by pine weevils to create
renewable energy.

Chugoku Mokuzai Co., Ltd. is a large general lumber
company that offers an extensive product line ranging
from lumber to laminated lumber and precut lumber.
The facility delivered by Takuma to the company’s
Hyuga Factory uses a circulating fluidized bed boiler that
can accommodate the customer’s need to effectively
utilize a wide range of biomass fuels.

[Equipment overview][Equipment overview]○ Location: Hanamaki City, Iwate Prefecture○ Power output: 6,250 kW○ Location: Hyuga City, Miyazaki Prefecture

TAKUMA 2017 ANNUAL REPORT

22

Business Development

3. Activities of Our Water Treatment Plant Business
More than 50 years have passed since Takuma entered the water treatment business. To date, we have helped improve thewater environment by building water treatment facilities. Recently, the industry has been called upon not only to improve thewater environment, but to reduce the amount of power that treatment equipment consumes and to create energy fromsludge.
This section introduces some of Takuma’s recent initiatives, using a sewage treatment plant as an example.

∗ Artist’s conception

3 Sludge-fueled power generation facility
Sludge, which is a byproduct of the sewage treatment process,contains a large amount of energy. As a result, it has been attracting
attention in recent years as a type of biomass.
Takuma harnesses its core incineration and boiler technology tomake effective use of sludge as fuel for power generation to create
electricity.

3 Sludge-fueled power

generation facility(

Installation example)

Tama River Water Recycling Center[currently under construction], Tokyo

Takuma receives order for a sludge incineration facility in Tokyo (Tama River Water Recycling Center)

1 Reaction tank facility

2 Rapid filtration facility

1 Reaction tank facility

Takuma has received an order for the rebuilding of an outdated sludge incinerator at the Tama River Water Recycling
Center. The company will deliver an energy-saving, energy-creating sludge incineration system combining a stoker furnace (atype of high-temperature, energy-saving incinerator) and a steam turbine generator system that utilizes waste heat from the
combustion process to generate electricity.
Smart Plan 2014, a basic energy blueprint for the city’s sewer operations that was formulated by the Tokyo Metropolitan Government’s
System overview
Bureau of Sewerage in June 2014, calls for expanded use of renewable● Plant capacity: 140 tons per day × 1 unit
energy, and this project will culminate in the delivery of a hightemperature, energy-saving incinerator∗ developed by the Bureau.
● Type: Stoker furnace
Takuma earned the order after conducting joint research into
● Waste heat utilization:
incineration systems with stoker furnaces along with the Bureau.
Drying equipment, white smoke prevention∗ High-temperature energy-saving incinerator
equipment, steam turbine generator
In addition to reduced emissions of N2O, which has a greenhouse coefficient that is
equipment
about 300 times higher than that of CO2, because it burns dehydrated sludge at hightemperatures, this sludge incinerator, which satisfies energy-saving standards formulated by the Tokyo Metropolitan Government’s Bureau of Sewerage, is characterized
by reduced CO2 emissions because it uses less power and auxiliary fuel.

A bioreactor tank, which provides the primary type of water
treatment at the site, purifies sewage through the action of
microorganisms. Takuma’s low-power agitator plays a key role byreducing the power consumption requirements of agitating activatedsludge to one-third of those of a conventional facility.

● Power output: 137 kW● Energy-saving, energy-creating sludge incineration system features

This incineration system, whose components include a sludge dryer, stoker furnace, waste heat boiler, and steam turbine
generator equipment, uses significantly less power than conventional systems thanks to a low-power-consumption designand steam-driven power generation, without utilizing auxiliary fuel. It is capable of high-temperature incineration ataround 900°C to 1,100°C, allowing a dramatic reduction in emissions of the greenhouse gas nitrous oxide (N2O). The
system will deliver benefits including energy savings, energy creation, reduced running costs, and lower greenhouse gas
emissions.
Installation example(Higashiuji Sewage Treatment Plant, Uji City)

Generated electricity provides some of the power
required to operate the incineration facility.

Cascading use ofrecovered heat

Dehydrated
sludge2 Rapid filtration facility
Dryer

A sand filtration facility removes even smaller suspended particles
in water that has already passed through the reaction tank andsedimentation basin. This type of facility is necessary when the river
into which treated sewage is discharged is subject to strict water
quality requirements or when the treated sewage will be reused.
Moving-bed sand filtration facilities, which are a specialty of
Takuma’s, deliver energy and space savings along with stable performance. To date, we have delivered more than 2,500 such systems
throughout Japan.

Dried sludge is supplied to the furnace,eliminating the need for auxiliary fuel.
Reduced N2O
High-temperature combustion at
900°C to 1,100°C breaks down N2O.

(Edagawa Sewage Treatment Plant, Nishinomiya City)
TAKUMA 2017 ANNUAL REPORTGenerator

Reduced CO2Heat is recovered efficiently by a boiler.

Reduced CO2

Installation example

23

Steam

Other features
Waste heatboilerIncinerator

Low soot and dust emissions and no
fluidized sand mean no clinker and sandadhesion problems.
The system is also safe to use with sludge
that has high phosphorus content.

Stoker furnace

Incineration process

TAKUMA 2017 ANNUAL REPORT

24

Business Development

4. Activities of Our Overseas Business
Biomass-fueled power plant business in the Southeast Asian market

Overseas Energy from Waste plant business

The biomass-fueled power generation boiler business in Southeast Asia is an essential part of any discussion of Takuma’s
history. We have delivered more than 370 biomass boilers to customers overseas, and we have an especially extensive trackrecord since 1959 of delivering boilers fueled by bagasse (fiber remaining after sugarcane is crushed) in Thailand, where wehave a local subsidiary. Takuma has supported the Thai sugar industry for many years.
As the feed-in tariff program becomes increasingly well established in various industries, a growing number of customers
in Thailand are looking beyond simply gaining a source of power for plant operation and instead opting to construct boilers
with the goal of using 10 MPa/520°C class boilers that operate at comparatively high temperature and high pressure levels toactively generate electricity for resale to boost their income. In this way, demand for this type of boiler facility is expected tocontinue to grow.
Under these conditions, we look forward to helping supply environmentally friendly power from biomass, particularly inSoutheast Asia, by accommodating demand not only in Thailand, but also in neighboring countries such as Indonesia andVietnam with reliable technology and fine-grained customer service based on our extensive experience in the field.

Electricity
Steam
Biomass

Waste processing problems have been manifesting themselves in countries around the world recently due to the effects of
rapid urbanization, and there have been reports of the adverse effects of burying waste as-is on living conditions, including
soil pollution and fires, especially in developing nations. These countries have embarked on initiatives to resolve waste
processing issues, but the fact remains that they require even more sophisticated waste processing diagnostic expertise,advice, and guidance.
Takuma has deep experience and an extensive track record that together make it a market share leader in waste
incineration and processing equipment in Japan. The photograph below depicts a plant that we delivered in Beijing, China,
but in fact we have delivered plants in nine overseas countries and regions, including China and the UK. Our Lakeside Plant in
the UK and our Gaoantun Plant in Beijing have earned a high level of praise and trust from their respective customers, forexample due to the facilities having achieved continuous operation for more than 8,000 hours a year.
We look forward to taking advantage of our extensive experience to closely exchange information and engage inpartnerships with local stakeholders as we offer optimal proposals that meet the full array of needs using technologicalcapabilities in which we have great confidence.
Apart from plant construction, numerous issues must be addressed in order to resolve waste processing problems,
including methods for collecting and sorting waste, awareness-raising and environmental education, and consensus-building
with local residents. While it takes time to resolve each of these in turn, we are confident that it is precisely by cooperatingwith such initiatives that we can best provide safe, stable plants that inspire pace of mind on the part of people in their hostcountries and communities.
Going forward, Takuma will continue to contribute to environmental protection by pursuing an overseas Energy from
Waste plant business that suits each country and community.

Water
Gas

Beijing Gaoantun Energy from Waste Plant (China)

Air● Processing capacity:

1,600 tons per day(800 tons per day × 2 units)

Ash

Ash

Bagasse-fired boiler installation example● Steam capacity:

73.8 tons per hour

● Steam pressure:

4.0 MPa● Steam temperature: 400°C● Rated power output: 15,000 kW × 2 units

U.K.: 1 plant

Sugarcane deliveries

Bagasse yard

U.S.A.: 2 plants

China: 2 plants

Taiwan: 4 plants

EfW plants delivered by Takuma overseas
25

TAKUMA 2017 ANNUAL REPORTTAKUMA 2017 ANNUAL REPORT26

CSR Initiatives

Consumer Issues

Corporate Governance

Activities Involving Product Quality

Corporate GovernanceIn 1997, in addition to defining our Quality Policy of “Manufacturing products that result in customer satisfaction,”
registering for “ISO 9001: Management Systems” certification (Registration No.: JQA 1952), and improving product quality
based on our quality management system, we carried out concrete activities to enhance customer satisfaction. The present
status for ISO 9001 certification includes having switched to ISO 9001:2000 in FY2002 and then to ISO 9001:2008 in
FY2010.
In order to produce products that customers truly appreciate, it is necessary not only to boost the quality of the productitself, but also to improve the content of that work as well as each individual’s ability to create a good product in eachprocess up to delivery (sales, design, procurement, manufacture, construction, and management).
Based on that Quality Policy, Takuma is pursuing a variety of measures in each sales, design, procurement, manufacture,
construction, and management process towards improving the quality of our products and services.

As of June 28, 2017, the Board of Directors wascomprised of six directors (excluding directors who aremembers of the Audit & Supervisory Committee) and four
directors (of whom three were outside directors). The Boardof Directors meets regularly once a month as a rule andwhenever else it is necessary to make decisions about
important issues related to business management andissues established by law and ordinances, as well as tooversee the execution of the directors’ duties.
In order to accelerate management decision-making andclarify where management responsibilities are placed, we
have adopted an operating officer system in which we
appoint operating officers who are entrusted with the
responsibility of executing our business activities. As of June
28, 2017, there were 14 operating officers (including those
who also serve as directors). Moreover, we have also established an Executive Execution Committee, which is chairedby the president/chief operating officer, as an organizationthat deliberates matters that are brought up at meetings ofthe Board of Directors and other important issues related tothe execution of our business activities. This committee
communicates and provides direction about items decided
by the Board of Directors and other important items related
to the execution of our business activities appropriately tothe divisions that are to execute them.

● Improving organizational operations● Improving individual employees’ capabilities

As measures for heightening the quality of theorganization as a whole, we establish quality objectives in each section and department at the beginning of the fiscal year and regularly report (twice peryear) the status of achievements to the QM committee (quality management review).

We create a “Work (Technical Capability) Achievement Checksheet” in order to improve the work
capability of the personnel required for each process.
In addition to allowing us to assess current skill levels
of individual employees on a regular basis, thissystem is used to review targets.

● Internal quality audit● Review of quality control and processes

We raise the accuracy of each job throughstandardization of the work procedure within eachprocess, confirm the operating status of the quality
management system by carrying out internal quality
audits in each section and department, and enhance
work content as necessary.
These audits are carried out on a regular basis byemployees who have been certified as internal audit
members by completing internal quality audit
member training seminars that are taught by lecturers from outside organizations. These seminars
enable those personnel to acquire knowledge ranging
from fundamental knowledge about ISO 9001 to
specific methods for implementing internal audits.

Quality is an important aspect of producing
excellent products.
When a non-compliant product is discovered, we
implement the measures (remedies) provided in thecorresponding manual (standard). Even in processes
that did not go so far as to produce a non-compliant
product, a review is carried out on processes thatmight have caused the issue as a preventive measure.
In order to also prevent procurement of noncompliant products, we provide further education(instruction) for all suppliers.

General Meeting of Shareholders
Appointment
and removal

Conduct thequestionnaire
surveyAuditing andsupervision

Board of Directors
AdviceSelection,
dismissal,
andAppointment supervisionand removal

Reporting andstatement ofviews

ReportingAppointment
and removal

Reporting

Reporting

Audit & Supervisory
Committee

Accounting Auditors

Follow up with recurrence
prevention measures
Undertake in parallel elsewhere(only when necessary)

Assistance

Recommendations

Discussion
andHuman Resources &reporting

Cooperation

Representative
Directors
Committee of
Executive Officers
Deliberation of(important matters)
Issuance of
instructions andcommunicationof information

Discussion ofand reportingon importantmatters

Auditing
Reporting
Reporting

Reporting

FY2007: 73.4 points (37 plants)

Variouscommittees
ReportingInternal Auditing
Department

Internal auditing

Internal auditing

Customer satisfaction surveys

Auditing ofaccounts

Audit & Supervisory
Committee’s Office

Remuneration
Advisory Committee

We created the Customer Satisfaction Survey Committee in FY2007 and have been conducting customer satisfaction
surveys since as an initiative to improve quality by asking customers how they feel about delivered products and Takuma staff
and using their feedback to improve quality.

Decide where to
conduct thequestionnaire survey

Appointment
and removal

Reporting

Cooperation● Customer satisfaction survey

Investigate the questionnaire results
Analyze problem factors and investigate
recurrence prevention countermeasures(if results are lower than our standard)(Particularly praiseworthy aspects)
Praiseworthy factor analysis

An Audit & Supervisory Committee that consists of four
members, of whom three are outside directors, is responsible for accounting and operational audits. Members of
the committee attend important meetings, including thoseof the Board of Directors and the Executive Execution
Committee, and they strive to understand and observe thestatus of business execution in a timely and appropriatemanner. Drawing on their professional background andexperience, they express their opinions as necessary from an
objective perspective, and they conduct strict auditing of
the business execution performed by the directors.
To facilitate the effectiveness of audits carried out by the
Audit & Supervisory Committee, the president holds regularmeetings with committee members to ensure goodcommunication, and we have established an Audit &Supervisory Committee’s Office to provide staff to help
carry out the committee’s work.
In addition to the above, we have established a Human
Resources & Remuneration Advisory Committee comprisedof independent officers, representative directors, and theofficer in charge of human resources. The committee works
to increase transparency and objectivity in the selection ofcandidates for director and operating officer positions andin the determination of compensation as well as toenhance the supervisory function of the Board of Directors.

Executive Officers

Compliance & CSR
Promotion Division

Education,
instructions,and reporting

Observing
and guidance

Execution of
responsibilities

Divisions and centers

FY2016: 86.8 points (27 plants)
Average evaluation scores from questionnaire surveys (out of a possible 100 points)
27

TAKUMA 2017 ANNUAL REPORT

Corporate governance structure(As of June 28, 2017)

TAKUMA 2017 ANNUAL REPORT28

CSR Initiatives

Corporate GovernanceDirectors, Audit & Supervisory Committee Members, Executive Officers
Directors★ President and Representative Director

IR Activities
In keeping with the “Takuma Group Code of Conduct,”
we provide our shareholders and investors with accurate
corporate information in a timely and fair manner. As apart of this, we provide notifications on the convening ofGeneral Meetings of Shareholders, balance sheet
information, timely disclosure information, marketablesecurities reports, annual reports in English and otherbusiness information, all on our website.
[Takuma website > IR information]
http://www.takuma.co.jp/english/investor/index.html

Individuals, others:
10.7%

Financial institutions
and stock brokerages:
46.9%

Other corporationsin Japan:
15.0%

Foreign individuals:
27.4%∗ Excluding treasury stock

Composition of shareholders (as of March 31, 2017)

Takaaki Kato★

Kengo Numata

Hiroaki Nanjo

Chief Executive Officer

Senior Managing Executive Officer

Managing Executive Officer

Stock Information
1. Total number of authorized shares: 321,840,000
2. Total number of outstanding shares: 83,000,000
3. Total number of shareholders: 4,307 (as of March 31, 2017)
4. Major shareholders (top 10)(as of March 31, 2017)

Shareholder

Tsuyohito Nishiyama

Hideki Takeguchi

Koji Tanaka

Executive Officer

Executive Officer

Executive Officer

Directors (Audit & Supervisory Committee Members)

Yasushi Enomoto

Hiromichi Satake∗Managing Executive Officer
Takashi Manabe

29

TAKUMA 2017 ANNUAL REPORT

Osamu Iwahashi∗∗ Outside

Minoru Murata∗

Executive Officers
Ryoji Tani
Norito Uchiyama
Masahiko Izumi
Yoshiki Kita

Mitsuaki Adachi
Akira Taguchi
Hidetoshi Tomita

Number of shares

Stake

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

8,708,300

10.5%Japan Trustee Services Bank, Ltd. (Trust Account)

5,660,100

6.8%

Mizuho Trust & Banking Co., Ltd. (Retirement Benefits Trust, Mizuho Bank, Ltd. Acoount)
Trust & Custody Services Bank, Ltd. (Re-entrustment)

4,022,000

4.8%

Nippon Life Insurance Company

3,593,282

4.3%

STATE STREET BANK AND TRUST COMPANY

2,005,320

2.4%

TAKUMA CO., LTD. Kyoueikai

1,727,238

2.1%

Sumitomo Mitsui Banking Corporation

1,621,875

2.0%

NIPPON TOCHI-TATEMONO Co., Ltd.

1,305,000

1.6%Japan Trustee Services Bank, Ltd. (Trust Account 9)

1,294,700

1.6%

GOLDMAN SACHS INTERNATIONAL

1,258,557

1.5%

5. Dividend Policy
Takuma returns profits to investors in line with a comprehensive assessment of business performance and other factors
based on a policy of maintaining stable dividends while working to enhance the quality of its business. Our overriding goal isto remain competitive in an increasingly challenging marketplace.
Two dividends are paid each fiscal year: an interim dividend offered by resolution of the Board of Directors and a year-end
dividend offered by resolution of the annual meeting of shareholders.
In keeping with this policy, the year-end dividend for the consolidated fiscal year under review was 7 yen per share, which,combined with the interim dividend, brought the annual dividend to 13 yen per share.
We plan to continue to build internal reserves to strengthen our financial foundation and to use funds to increase
corporate value through capital investment, R&D investment, and other avenues in order to lay the groundwork for the
future growth and expansion of our businesses.

TAKUMA 2017 ANNUAL REPORT30

CSR Initiatives

Corporate GovernanceRisk Management Structure

Business Continuity Plan (BCP)

Takuma follows a “Risk Management Policy” that connects company-wide risks and separately classifies them into “projectrisks” related to our core business, i.e., plant construction, “DBO project risks” and “DBO project operation, maintenance andmanagement risks” related to our DBO business, and “potential risks,” “actualized risks,” and “financial reporting risks”
related to other corporate business activities.
We are also building the risk management organization shown below and constructing a system of risk management andpromoting the strengthening of management for group companies as well through our “Takuma Group Coordinating
Committee for Compliance and CSR Promotion.”

Takuma has formulated a Business Continuity Plan based on the following policies to ensure proper and appropriate
continuity of business operations in the event of a large-scale disaster, pandemic, or other emergency:
1. In addition to implementing disaster-related measures to secure the safety of corporate officers and employees,
maintain structures so as to enable continuity of business operations while minimizing damage in an emergency.
2. Strive to respond to customer needs and recover from damage quickly by working closely with suppliers and partnercompanies to continue business operations.
3. Earn the trust of numerous stakeholders, including employees, their families, shareholders, and nearby residents, andfulfill social needs by continuing business operations.

Risk Management Policy
Disaster rule system diagram
Basic purpose of risk management
Risk refers to all phenomena that interfere with the group’s ability to achieve its business objectives or cause losses orharm to the interests of stakeholders.
The Takuma Group practices risk management with the goal of increasing its corporate value by working tomaximize returns while minimizing the negative impacts of risk.

Risk management policy
Risk management code
Crisis Management CodeRisk management action guidelines
1. The president and CEO is responsible for risk management at Takuma.
2. All officers and employees participate in risk management activities.
3. Risk management activities are carried out in accordance with applicable guidelines such as the Risk Management
Rules.
4. Risk management activities are carried out in line with the Medium-Term Management Plan and annual plan, andwe work to make improvements on an ongoing basis.
5. When risk manifests itself, we respond by taking responsible action quickly to minimize any damage and creating
provisional organizational entities as necessary.
6. Group companies carry out risk management activities in accordance with their own policies and plans, with support
from Takuma.

Overseas Risk Management CodeDisaster Prevention Management CodeFire Prevention Plan

∗Based on Fire Service Act Enforcement
Regulations.

Earthquake Countermeasure Manual
Storm and Flood Damage Countermeasure Manual
Novel Influenza Countermeasure Manual

BCP activation
Business Continuity
Plan (BCP)

Safety Confirmation System Administration Rules

Reportingpg
Board ofDirectors

President
Executive Execution
Committee

Request for
decision/
reporting
Request for
decision/
reporting

Report oninternal
controlevaluation
concerning
financialreporting

Reporting

Reportingpg
Risk Management
Department

Audit
Department

Planning/
reporting

Risk Management Code, Crisis Management Code
Project Risk Management CodeDBO Project Risk Management CodeRisk Management Code for DBO Project Operation,
Maintenance and ManagementgProject risk
DBO Project risk
DBO Project operation, maintenanceand management risk
Manifest risk

Risks
concerning
corporate
activities
Eachdivision

Potential risk
Risks
concerning
financialreporting

Evaluation

Evaluation
Takuma Group Coordinating
Committee for Compliance & CSR
Promotion (including risk matters)

31

TAKUMA 2017 ANNUAL REPORT● Disaster prevention and earthquake resistanceGroup
companies

features of the Takuma Building
The current Takuma Building was completed in December
1995.
To increase the earthquake resistance of the building,which was designed to serve as the company’s head office,engineers placed unbonded braces on key walls and used a
concrete-filled tube (CFT) structure, which was entering into
widespread use at the time as a successor to the reinforced
concrete (RC), steel-reinforced concrete (SRC), and steel (S)architectural structures.
The building also incorporates a number of equipment
systems, including a rooftop generator designed to provide
power for use in the event of a natural disaster or otheremergency (see photograph∗). The system can be used to
power the building’s fire suppression system pumps, smoke
exhaust fans, and emergency elevators, among otherequipment. Based on numerous reports of generators withwater-cooled engines failing in the event of the Great
Hanshin-Awaji Earthquake when their source of coolingwater was cut off, we chose a system with an air-cooledengine.

Emergency rooftop generator forproviding emergency power ∗TAKUMA 2017 ANNUAL REPORT32

CSR Initiatives

Participation in the Community

The Environment

Disaster Preparedness Agreement Signed

Basic Environmental Policy

Takuma has entered into an “Agreement on Use as a Temporary Evacuation Center in Case of
Tsunamis, Etc.,” a Disaster Preparedness Agreement, with Amagasaki City.
Our corporate Head Office is located in Amagasaki where, based on lessons learned from of theGreat East Japan Earthquake, they are advancing the establishment of temporary evacuation areas inpreparation for disasters, such as those that may be generated by tsunamis from earthquakes in the
Tonankai and Nankai areas that are anticipated in the near future, as well as those from flooding
caused by typhoons, heavy rain, and high tides.
To that end, we concluded a Disaster Preparedness Agreement with that city defining our Head
Office as a temporary evacuation center and enabling the local populace free access whenever there isa possibility of one of the above disasters occurring. Our corporate Head Office is thus designated by
Amagasaki City as a “Temporary Evacuation Center in Case of Tsunamis, Etc.”

Our company has established the “Basic Environmental Policy” as follows; aiming to ensure employees contribute to global
environmental conservation. This basic policy applies to the activities of all company departments.

Environmental Philosophy
Takuma is committed to preserving the environment and realizing an affluent society
through business activities under the Company Motto: “Value Technology, Value People,
Value the Earth.”

Yotteko-mura, Arai
Takuma offers the “Takuma Club” recreation facility located in our Harima Factory
free of charge as the village office for “Yotteko-mura, Arai,” which was launched in
Takasago City’s Arai district with support from Hyogo Prefecture’s “Kenmin Koryu
Hiroba” (Civic Exchange Plaza) project. “Yotteko” means “come on over” in Banshu(southwestern part of Hyogo Prefecture) dialect, and “Yotteko-mura” is being used asa new local community venue in which anyone can participate at any time.

Operational Guidelines
1. All Takuma Group companies will recognize the importance of maintaining a balance between
preservation of the environment and business activities.
2. Continuously develop activities to preserve the environment that comply with applicable environmental laws and ordinances, and ensure environmental control and assessment systems conformto international environmental standards.
3. Promote development of improved technologies and products for society that preserve theenvironment.
4. Address resource conservation, energy efficiency, recycling, and minimization of waste generated
by all business activities.
5. Improve employee awareness and understanding about the importance of preserving the environment through environmental education and internal promotional activities.
6. Provide the community with information on the activities of Takuma to preserve the environment.

Contribution to Society
Takuma strives to contribute to society through activities such as the following:● WFP fundraising activities
Takuma serves on the Board of Trustees of the Japan Association for the World Food Programme,
the official supporting partner of the World Food Programme in Japan.
Each year, we display WFP posters at the entrances to company buildings and in cafeterias during
a campaign that lasts from June through August. The campaign serves both to increase employee
interest in the world’s food problems and to collect donations to address them. According to the UN
WFP, about 800 million people suffer from hunger worldwide. Through the Japan Association for theWorld Food Programme, we will continue to raise funds to help people suffering from food scarcity.

● Contributions to NPOs

• Purchasing UNICEF Christmas cards
Takuma purchases UNICEF Christmas cards. A portion of the proceeds is used to fund UNICEF
in their work to help children around the world.
• Donating calendars to a charity calendar market
Takuma donates unused calendars to a calendar market sponsored by the NPO “Nippon
Volunteer Network Active in Disasters.”
In FY2016, we donated more than 100 calendars. The proceeds are used to provide aid forvictims of natural disasters and other crises.

Environmental Management■ The situation concerning the acquisition of ISO 14001

Our Harima Factory has acquired ISO 14001 certification and has been implementing environmental management
activities based on the environmental management system established to comply with international standards. Our groupcompanies Nippon Thermoener Co., Ltd., Takuma Technos Co., Ltd., and Dan-Takuma Technologies Inc. have also acquired
ISO 14001 certification.

Environmental efficiency
Even as total environmental impacts must be reduced, it isnecessary from a business management standpoint to pursue
environmental initiatives that are characterized by a high degreeof economic efficiency. We report environmental efficiency using
an index calculated in accordance with examples provided by the
Ministry of the Environment in its Environmental Performance
Indicators Guidelines for Organizations.
At the Takuma Group, we calculate environmental efficiency as
the ratio of consolidated net sales to greenhouse gas emissions.

The Takuma Group’s definition ofenvironmental efficiency
Consolidated net sales (million JPY)
Greenhouse gas emissions (tons-CO2)
29.12

30
20

21.04

22.46

24.42

26.82

10
0

2012

2013

2014

2015

2016 (FY)

Environmental efficiency

33

TAKUMA 2017 ANNUAL REPORTTAKUMA 2017 ANNUAL REPORT34

CSR Initiatives

The Environment
Takuma’s CO2 Reduction Technologies
We convert waste/biomass into energy and reduce CO2!

In 1 year,
uma p
produ
du
Takumaproducts

abouttcut

5milliontons!

(Equivalent to the CO2 absorbed
by about 350 million Japanesecedar
edar tre
trees
ee ∗)

Financial Information∗Assuming one Japanese cedar
tree absorbs 14 kg of
CO2 per year.

Reducing CO2 with biomass power generation boilers
rss
A classic example of biomass power generation can be found in sugar factories.
Factories that make sugar produce large quantities of residue from sugarcane, the raw
material used to make sugar. Sugarcane is crushed into a pulp, and sugar is extracted ina mill. The remaining fiber is called bagasse and can be used as boiler fuel. The steam
produced is used as the plant’s heat source, and any remaining steam is used togenerate electricity that is utilized to operate the plant and, if any remains, sold to theelectric power company. The amount of power generated at sugar factories has grown
greatly, with examples of single plant that generates 50,000 kW.

In 1 year,

down

about

4

milliontons!

CO2 reduction achieved by
Takuma’s biomass power
generation boilers(as of end of FY2016)

What is biomass?
Wood
chips

EnergyPalm
Bagasse kernel
shellsBiomass-fueled power
generation boiler

Biomass is any recyclable organic material derived from a livingorganism, but does not include fossil fuels, such as oil and coal. For
example, even though CO2 is emitted if wood waste products areincinerated, when trees grow again, they absorb CO2 to offset theemissions from incineration, so there is no increase in CO2 in theatmosphere. By using the heat produced by incinerating biomass togenerate power, the amount of power generated using fossil fuels
can be reduced, and this contributes to decreasing CO2.

CO2 reduction from waste incineration plants
Garbage, or waste, is an important source of energy. About 500 kW∗∗ of power canbe generated from one ton of garbage. In Europe and the Americas, waste incineration
plants are often called Energy from Waste (EfW) plants, and recovering energy fromgarbage has become the norm. Waste must be seen as a “resource,” so Takuma isseeking to be the best in the world with our technologies to convert waste into energy
and reduce CO2.
∗∗Presumes waste with a calorific value of 8,800 kJ per kg and a power generation efficiency of 20%

1 ton ofgarbage

35

TAKUMA 2017 ANNUAL REPORT

Waste
combustion

About
500 kW of
power
generated

In 1 year,

down

about

1

milliontons!

CO2 reduction achieved by Takuma’smunicipal solid waste incineration
plants and industrial waste
incineration plants(as of end of FY2016)

Financial Information

Status of Business Activities(2) Status of Cash Flow

1. Overview of Business Performance

Cash and cash equivalents at the end of the consolidated fiscal year under review rose 8,797 million yen from theprevious consolidated fiscal year to 57,132 million yen.

(1) Business Performance
During the consolidated fiscal year under review, the Japanese economy continued to exhibit a gradual improving trend
thanks to a recovery in such areas as employment, income, corporate earnings, and personal consumption spending. At thesame time, the future direction of the economy remained opaque due to increasing uncertainty overseas, including due to an
economic slowdown in China and other emerging markets, England’s exit from the EU, and the political situation in the U.S.
We expect to see continued demand for our principal businesses thanks to increased environmental awareness andprogress in initiatives to prevent global warming and conserve resources and energy, including in planned replacement of,and updates to, outdated waste treatment facilities and in energy policies that incentivize biomass-fueled power plants, forexample feed-in-tariff programs for power generated using renewable energy.
Looking to our business performance during the consolidated fiscal year under review, order volume surged 91,106
million yen (91.2%) from the previous consolidated fiscal year to 191,026 million yen as orders for the construction of
biomass power plants and sewage sludge incineration systems bolstered waste treatment facility construction, primaryequipment upgrades, and operation, maintenance, and management.
Net sales rose 3,221 million yen (2.8%) from the previous consolidated fiscal year to 116,309 million yen on steadyprogress in waste treatment facility and biomass power plant construction, leaving a backlog of 214,142 million yen.
Net sales growth and cost savings combined to boost our gross margins and offset increases in R&D spending andselling, general and administrative expenses to yield operating income of 10,974 million yen, ordinary income of 11,606
million yen, and profit attributable to owners of the parent of 8,551 million yen, up 1,785 million yen (19.4%), 1,960 million
yen (20.3%), and 734 million yen (9.4%) from the previous consolidated fiscal year, respectively.

Cash Flows from Operating Activities
Net cash provided by operating activities totaled 9,590 million yen (compared to net cash provided by operating activitiesof 6,728 million yen during the previous consolidated fiscal year). Principal factors included net income before taxes of
11,606 million yen, which offset a decrease of 2,143 million yen in accounts payable.

Cash Flows from Investing Activities
Net cash used in investing activities totaled 143 million yen (compared to net cash used in investing activities of 445
million yen during the previous consolidated fiscal year). Expenditures of 575 million yen on the purchase of property, plantand equipment and of 473 million yen on the purchase of investment securities offset income of 1,328 million yen fromcollection of loans receivable.

Cash Flows from Financing Activities
Net cash used in financing activities totaled 1,787 million yen (compared to net cash used in financing activities of 2,900
million yen during the previous consolidated fiscal year). Principal factors included payment of 992 million yen on dividends
and expenditures of 673 million yen on repayment of long-term debt.

2. Production Output, Orders Received and Sales(1) Production Results

Results by Business Segment
Domestic Environment and Energy
In addition to construction, primary equipment upgrades, operation, maintenance, and management of waste treatment
facilities, we received orders for projects including construction of biomass power plants as well as sewage sludge
incineration and power plants, resulting in significant order volume growth of 87,896 million yen (116.3%) from the previous
consolidated fiscal year to 163,505 million yen. Net sales rose 2,149 million yen (2.4%) from the previous consolidated fiscal
year to 90,643 million yen thanks to steady progress in the construction of waste treatment facilities and biomass power
plants.
Operating income rose 1,893 million yen (19.2%) from the previous consolidated fiscal year to 11,727 million yen.

The following table summarizes the Group’s production results during the consolidated fiscal year under review bybusiness segment:
Segment

Production output(millions of yen)

Year-on-year(%)

Domestic Environment and Energy

62,223(3.1)

Overseas Environment and Energy

2,112

154.5

Package Boiler

11,2606.2

Equipment and System Business
Subtotal

Overseas Environment and Energy
Order volume rose 2,209 million yen (256.5%) from the previous consolidated fiscal year to 3,070 million yen thanks toan order for a new biomass power boiler plant in Southeast Asia. Net sales rose 1,392 million yen (167.7%) from theprevious consolidated fiscal year to 2,222 million yen.
Performance declined as operating income of 223 million yen during the previous consolidated fiscal year turned into an
operating loss of 154 million yen.

Package Boiler
Efforts to secure demand for upgrades higher-efficiency once-through boilers and vacuum-type water heaters, andmaintenance demand for parts sales and repairs pushed up order volume 274 million yen (1.7%) from the previous
consolidated fiscal year to 16,724 million yen. Net sales rose 775 million yen (4.7%) to 17,165 million yen.
Operating income rose 21 million yen (2.3%) from the previous consolidated fiscal year to 917 million yen.

Equipment and System Business
Order volume rose 710 million yen (9.7%) from the previous consolidated fiscal year to 8,041 million yen thanks togrowth in orders for building equipment and a generally steady flow of orders for semiconductor-related equipment. Net
sales fell 998 million yen (13.0%) from the previous consolidated fiscal year to 6,666 million yen.
Operating income fell 30 million yen (8.3%) from the previous consolidated fiscal year to 322 million yen.

Inter-segment transactions
Total

5,370

(16.8)

80,967

(1.4)

(347)

24.2

80,620(1.4)

Notes:
1. Amounts are expressed as total manufacturing expenses.
2. Amounts do not include consumption tax or other taxes.

(2) Orders Received
The following table summarizes orders received by the Group during the consolidated fiscal year under review by businesssegment:
Segment

Orders received(millions of yen)

Year-on-year(%)

Backlog(millions of yen)

Year-on-year(%)

Domestic Environment and Energy

163,505

116.3

203,571

55.7

Overseas Environment and Energy

3,070

256.5

2,310

58.0

Package Boiler

16,7241.7

2,974(12.9)

Equipment and System Business

8,041

9.7

5,326

34.8

191,34290.9

214,183

53.5

(315)

(4.9)

(41)

(63.4)

191,02691.2

214,14253.6

SubtotalInter-segment order volume
Total

Notes:
1. Amounts do not include consumption tax or other taxes.
2. Package Boiler figures include some speculative production. In addition to order-driven production, the orders received and the backlog
figures in the above table include that portion of speculative production for which delivery to a specific customer has been finalized.

37

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38

Financial Information(3) Sales• Safety and quality

The following table summarizes the Group’s sales results during the consolidated fiscal year under review by businesssegment:

Operating performance, financial standing, reputation, and other aspects of the Group’s operations may be impacted by
accidents or incidents caused by human error or product defects occurring during the manufacture, installation orconstruction, operational management, or subsequent use of Group products. In addition, the Group may be affected byunanticipated cost overruns or other adverse developments due to unforeseen issues or other problems at plants and otherfacilities for which it has received orders, in particular when new technologies are introduced or deployed.

Segment

Sales amount(millions of yen)

Year-on-year(%)

Domestic Environment and Energy

90,643

2.4

Overseas Environment and Energy

2,222

167.7

Package Boiler

17,165

4.7• Intellectual property rights
The Group’s business activities may be impacted if it becomes unable to protect intellectual property rights such as
patents and trademarks that it owns or has acquired, if those rights are infringed upon by other parties, or if the Group musttake steps to avoid infringing on the intellectual property rights of other parties.

6,666(13.0)

116,696

2.9

Inter-segment sales

(387)

33.4

• Other risks

Total

116,309

2.8

Note:
Amounts do not include consumption tax or other taxes.

The Group’s operating performance and financial standing may be impacted in a variety of ways by factors such as
government regulations, vendor supply capability, its ability to hire and retain human resources in Japan and abroad, loss of
key personnel, lawsuits, and other contingencies as it carries out its business activities.

3. 11th Midium-Term Management Plan (FY2015 to FY2017)

5. Research and Development Activities(1) Target Management Indicators

Having identified the fields of environmental protection and renewable energy utilization as its principal businessdomains in an effort to achieve a sustainable, recycling-oriented society that is not excessively dependent on nuclear power orfossil fuels, the Takuma Group is focusing its management resources on business in these domains as it pursues research anddevelopment in keeping with the corporate vision it has set forth of being an indispensable presence in society as a leading
company.
The Takuma Group has consolidated its technology-related departments into the Engineering Group, through which it isactively working to strengthen and pass on its technological capabilities and develop new technologies, products, andservices through collaboration between the Takuma Group companies and joint research with outside research institutions
and universities.
Expenditures on research and development during the consolidated fiscal year under review totaled 973 million yen.
Principal research and development activities by business segment were as follows:

Equipment and System Business
Subtotal

The Group considers consolidated ordinary income to be its most important management indicator.
The 11th Medium-Term Management Plan sets forth the following quantitative targets in an effort to steadily expand ourbusiness in terms of both quantity and quality so as to facilitate sustained growth (all figures consolidated-basis):① Cumulative order volume during plan term (FY2015 to FY2017): 400.0 billion yen② Cumulative net sales during plan term (FY2015 to FY2017): 360.0 billion yen③ Cumulative ordinary income during plan term (FY2015 to FY2017): 27.0 billion yen(2) Policies① Maintenance and expansion of market position in the EPC business② Expansion of businesses that generate base profits③ Initiatives that target growth markets④ Further enhancement of the company’s financial strength⑤ Human resources management⑥ Cultivation of a robust organizational culture

4. Business and Other Risks
Although the Takuma Group strives to neutralize business and other risks on an organizational and systematic basis, we
believe the risks described below may influence investor decisions due to their potential to impact operating performance,
financial standing, and other aspects of the Group’s operations.
Forward-looking statements represent the Group’s judgment as of the end of the consolidated fiscal year under review.

• Economic trends
The Group’s operating performance and financial standing may be impacted by trends in public investment and private
capital investment, structural changes in price competitiveness and markets due to factors such as entry of new companies
into the market, changes in the pricing of raw materials and other inputs, stock market conditions, and other factors.

• Natural disasters
Large natural disasters such as earthquakes, storms, and flooding may impact the Group’s operations.

• Country risk

(1) Environment and Energy① In the area of waste treatment, we are constructing a demonstration incinerator with a next-generation stoker at one of
our plants with the principal goal of developing proprietary technology to aid in reducing life cycle cost and boostingenergy recovery. We are utilizing this demonstration incinerator in a program of ongoing development of such aspects ofequipment operation as the reduction of harmful substances (e.g., nitrogen oxides and dioxins) through combustion
improvements and increases in power generation efficiency. Furthermore, we continue to conduct trials to verify that use
of water-cooled stokers, which have a track record of standing up to the demands of use in industrial waste incinerators
over extended periods of time, can reduce maintenance and management costs in municipal waste incinerators
compared to conventional air-cooled stokers due to their improved durability. These trials include efforts to addressmaterial improvements. In addition, we are utilizing a comprehensive support system for operation, maintenance, andmanagement that enables integrated use of a range of data that facilities previously managed and evaluatedindependently in an effort to stabilize combustion and to develop technologies for remote monitoring using AI and IoT.
② In the area of energy, we continue to develop constituent technologies for burning a variety of fuels including unutilized
wood biomass to generate power, an area in which we are receiving many inquiries in connection with Japan’s newfeed-in tariff program for power generated from renewable sources.
③ In the area of water treatment, we continue to develop a sewage sludge incineration and power generation system aswell as technologies related to a new system for eliminating nitrogen by means of the anammox process. For sewage
sludge incineration and power generation, we continue to develop combustion technology to allow stable incineration ofsludge with varying water content. We also continue to develop technologies for expanding the range of wastewaterwith which the anammox process can be used.
The research and development budget for this segment of our business was 853 million yen.

As the Group expands its business operations overseas, it becomes exposed to the potential impact not only of economic
conditions and exchange-rate fluctuations in the countries in which it operates, but also of acts of God such as regional
terrorism, conflict, natural disasters, and infectious disease.

39

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40

Financial Information(2) Package Boiler

6. Analysis of Financial Position and Operating Results

We developed a burner for oil-burning once-through boiler and vacuum-type hot water heaters capable of continuous
combustion while using less steam and hot water.
By reducing the number of combustion start-stop cycles, this new burner reduces the amount of fuel consumed in theprocess of reheating the boiler following the ventilation operation and resulting cooldown that accompanies each cycle,
lowering running costs and making possible greater energy savings. Going forward, we will introduce a series ofonce-through boilers and vacuum-type hot water heaters that use the new burner.
The research and development budget for this segment of our business was 51 million yen.

(3) Equipment and System BusinessWe are working to develop and commercialize washing systems for semiconductor plants in response to a recovery in thesemiconductor industry and growing investment in semiconductor manufacturing equipment. In addition to commercializing
a leaf-type, small-radius wafer washing system that delivers high washing effectiveness, we are working to develop washingsystems based on surface treatment technology that utilizes plasma at atmospheric pressure as well as micro-bubble washingtechnology that will boost washing effectiveness with fine bubbles while simultaneously reducing cleaning agent use.
Going forward, we will continue to improve our washing systems as we work to develop products that meet customer
needs.
The research and development budget for this segment of our business was 68 million yen.

(4) Contracts of Major Importance in the Group’s Business① Technology In-licensing Contracts
Contractee

Contract target

Contract date

Name of other party

Contract term

Takuma Co., Ltd. Continuous bed filtration of liquids

April 1979

Nordic Water Products AB(Sweden)

Until December 2018

Takuma Co., Ltd. Process for the organic andanaerobic treatment of waste

December 2011

Hitachi Zosen Inova AG(Switzerland)

For 10 years, then automaticallyrenewed every year

Note:
Most of the above contracts entail payment of a fixed percentage of sales in addition to a one-time payment at the time the contract wasentered into.

(1) Financial Position
The Takuma Group has formulated a financial policy of maintaining an appropriate level of liquidity, securing funding forbusiness activities, and maintaining a robust balance sheet.
Total assets at the end of the consolidated fiscal year under review increased 7,587 million yen from the end of theprevious consolidated fiscal year to 140,201 million yen as an increase of 8,803 million yen in cash and deposits offset a
decrease of 1,320 million yen in notes and accounts receivable.
Liabilities fell 1,331 million yen from the end of the previous consolidated fiscal year to 72,474 million yen as a decreaseof 2,426 million yen in notes and accounts payable offset an increase of 1,276 million yen in accrued income taxes.
Net assets rose 8,918 million yen from the end of the previous consolidated fiscal year to 67,727 million yen as increases
of 8,551 million yen in retained earnings due to the posting of profit attributable to owners of the parent and of 1,300
million yen in valuation difference on available-for-sale securities offset a decrease of 992 million yen in retained earnings dueto the payment of dividends.
As a result, the equity capital ratio rose 4.0 points from the end of the previous consolidated fiscal year to 48.1%, andnet assets per share rose 107.59 yen from the end of the previous consolidated fiscal year to 815.77 yen.

(2) Operating Results
Net sales during the consolidated fiscal year under review rose 3,221 million yen from the previous consolidated fiscal
year to 116,309 million yen.
Gross profit was 25,616 million yen, and selling, general, and administrative expenses were 14,642 million yen. After
deducting the latter, operating income was 10,974 million yen.
Non-operating income of 775 million yen and non-operating expenses of 144 million yen yielded ordinary income of
11,606 million yen.
There was no extraordinary loss or extraordinary gain, yielding income before income taxes and minority interests of
11,606 million yen.
Profit attributable to owners of the parent after deducting income taxes of 3,031 million yen and loss attributable tonon-controlling shareholders of 24 million yen was 8,551 million yen. An overview of net sales and operating income bysegment can be found in “Status of Business Activities: 1. Overview of Business Performance.”② Technology Out-licensing Contracts
Contractee

Contract target

Contract date

Name of other party

Takuma Co., Ltd. N-type palm wastes fired water-tube September 1982 P.T. Super Andalas Steelboiler(Indonesia)
Takuma Co., Ltd. Auxiliary agent for filter-type dust
collector

July 1993

Contract term
For 15 years, then automaticallyrenewed every year

MITSUI MINING & SMELTING For 10 years, then automaticallyCO., LTD. (Japan)
renewed every year

Takuma Co., Ltd. Dust elimination technology inNovember 2005
exhaust gas treatment systems using
impulse waves

Nihon Spindle Manufacturing For 10 years, then automaticallyCo., Ltd. (Japan)
renewed every year

Takuma Co., Ltd. Coal firing boiler

P.T. Panca Mandiri Essencia(Indonesia)

June 2007

Until May 2017 (See Note 2.)

Notes:
1. Most of the above contracts entail receipt of payment of a fixed percentage of sales in addition to a one-time payment at the time thecontract was entered into.
2. The contract was valid until May 2017 and was not renewed.

41

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42

Financial Information

Financial Statement■ Consolidated Balance Sheets
TAKUMA CO., LTD. and Consolidated Subsidiaries
As of March 31, 2017 and 2016

Thousands of
U.S. dollars(Note 1)Millions of yen

ASSETS
Current assets:
Cash and time deposits (Notes 4, 6 and 8) .....................
Notes and accounts receivable (Note 6):
Trade ..........................................................
Unconsolidated subsidiaries
and affiliated companies ...........................
Other ..........................................................
Less allowance for doubtful accounts ...........
Total ............................................
Inventories (Note 5) .......................................................
Deferred tax assets (Note 15) .........................................
Other ............................................................................
Total current assets .................................
Property, plant and equipment:
Land (Note 8) ................................................................
Buildings and structures (Note 8) ...................................
Machinery, equipment, lease assets
and construction in progress .......................................
(Note 8) ........................................................................
Less accumulated depreciation ......................................
Total property, plant and equipment ....
Investments and other assets:
Investment securities (Notes 6, 7 and 8) .........................
Investments in:
Unconsolidated subsidiaries
and affiliated companies (Note 6) ..............
Other ..........................................................
Less allowance for doubtful accounts ...........
Total ............................................
Deferred tax assets (Note 15) .........................................
Other ............................................................................
Total investments and other assets .......
Total assets ............................................................................

2017¥ 57,719

2017

2016
¥

48,916$514,475

44,71644,935398,574

391
242
(27)
45,322
3,897
2,471
766
110,175

1,457
289
(39)
46,642
4,041
2,803
607
103,009

3,486
2,160
(247)
403,973
34,74422,021
6,827
982,040

3,018
12,225

3,018
12,21926,898108,973

11,11926,362(17,434)
8,928

11,12326,360(16,764)
9,596

99,109234,980(155,401)
79,57913,161

11,136

117,311

4,950
938
(461)
5,427
2,210
300
21,098

5,556
823
(467)
5,912
2,648
313
20,00944,123
8,363(4,108)48,378
19,6992,668
188,056¥ 140,201¥ 132,614$ 1,249,675

Thousands of
U.S. dollars(Note 1)Millions of yen

LIABILITIES AND NET ASSETS
Current liabilities:
Short-term loans payable (Notes 6 and 9) ......................
Current portion of long-term debt (Notes 6 and 9) ........
Notes and accounts payable (Note 6):
Trade ..........................................................
Unconsolidated subsidiaries
and affiliated companies ............................
Other ..........................................................
Total ............................................
Accrued income taxes ....................................................
Advances received .........................................................
Allowance for guarantees on completed work ...............
Allowance for losses on sales contracts ..........................
Other ............................................................................
Total current liabilities .............................
Long term liabilities:
Long-term debt (Notes 6 and 9) ....................................
Allowance for directors’ and executive officers’
retirement benefits ......................................................
Net defined benefit liability (Note 10) ............................
Other ............................................................................
Total long term liabilities ........................
Total liabilities ..........................................
Contingent liabilities (Note 11)
Net assets (Note 12):
Common stock ..............................................................
Authorized: 321,840,000 shares
Issued: 83,000,000 shares
Capital surplus ...............................................................
Retained earnings ..........................................................
Treasury stock, at cost ...................................................
331,201 shares in 2017 and 328,764 shares in 2016
Total shareholders’ equity ............................
Unrealized gains on securities ........................................
Deferred gains and losses on hedges .............................
Foreign currency translation adjustments .......................
Remeasurements of defined benefit plans ......................
Total accumulated other comprehensive income ..
Non-controlling interests in consolidated subsidiaries .....
Total net assets ........................................
Total liabilities and net assets ..............................................

2017
¥

7,675
468

2017

2016
¥

7,750
673

$

68,411
4,169

32,56934,584

290,300

344
931
33,844
2,532
7,935
177
3,578
5,734
61,943575
1,111
36,270
1,256
7,700
141
5,164
4,190
63,144

3,071
8,299
301,670
22,56770,733
1,577
31,88951,114552,130

929

1,396

8,278

152
9,011
439
10,531
72,474

189
8,668
408
10,66173,805

1,356
80,317
3,912
93,863645,993

13,367

13,367

119,150

3,768
46,258(234)

3,768
38,754(232)

33,588412,323(2,095)

63,159
4,886
(21)
6
(591)
4,280
288
67,727¥ 140,201

55,657
3,586
(27)
(11)
(660)
2,888
264
58,809¥ 132,614

562,966
43,548(185)
50(5,264)
38,1492,567
603,682$ 1,249,675

See accompanying notes.

43

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44

Financial Information■ Consolidated Statements of Operations■ Consolidated Statements of Comprehensive Income

TAKUMA CO., LTD. and Consolidated Subsidiaries
For the years ended March 31, 2017 and 2016

TAKUMA CO., LTD. and Consolidated Subsidiaries
For the years ended March 31, 2017 and 2016

Thousands of
U.S. dollars(Note 1)
2017

Millions of yen
2017
2016
Net sales (Note 17) ................................................................
Cost of sales (Notes 10, 13, 14 and 17) ..............................
Gross profit ...................................................................
Selling, general and administrative expenses(Notes 10, 14 and 17) .........................................................
Operating income (Note 17) ..........................................
Other income (expenses):
Interest and dividend income .........................................
Interest expense ............................................................
Loss on disposal of property, plant and equipment ........
Equity in earnings of affiliated companies ......................
Impairment loss ............................................................
Other, net .....................................................................
Other income (expenses), net .................

¥ 116,309
90,69325,616¥ 113,088
89,744
23,344$ 1,036,717
808,393
228,324

14,642
10,974

14,1559,189

130,509
97,815

337
(76)
(51)
280
142
632

366
(105)
(167)
287
(267)
76
190

3,000
(673)
(456)
2,491
1,269
5,631

Income before income taxes ................................................
Income taxes (Note 15):
Current .........................................................................
Deferred ........................................................................
Total income taxes ...................................

11,606

9,379

103,446

2,859
172
3,031

1,558
11
1,569

25,482
1,532
27,014

Profit .......................................................................................

8,575

Profit (loss) attributable to non-controlling interests
in consolidated subsidiaries ...............................................
Profit attributable to owners of parent ..............................

Per share:
Net income ...........................................................................
Diluted net income ...............................................................
Cash dividends applicable to the year ....................................

24¥

76,432

7,810

215

(7)

8,551

¥

7,817

$

U.S. dollars(Note 1)

Yen¥

103.43
13.00

76,217

¥

94.55
11.00

$

0.92
0.12

Thousands of
U.S. dollars(Note 1)
2017

Millions of yen
2017
2016
Profit ........................................................................................
Other comprehensive income:Unrealized gains (losses) on securities ............................
Deferred gains and losses on hedges .............................
Foreign currency translation adjustments .......................
Remeasurements of defined benefit plans ......................
Total other comprehensive income .....................
Comprehensive income (Note 16) .............................................
Comprehensive income attributed to:
Owners of the parent .........................................
Non-controlling interests ....................................

¥

8,575

¥

1,299
(29)
23
69
1,362
9,937

¥

9,942
(5)

¥

7,810

¥

(511 )
(41 )
(55 )
(54 )
(661 )
7,149

¥

7,165
(16 )

$

76,432$

11,582
(262)
200
617
12,13788,569$88,619(50)■ Consolidated Statements of Changes in Net Assets
TAKUMA CO., LTD. and Consolidated Subsidiaries
For the years ended March 31, 2017 and 2016
Millions of yen

Commonstock

Capitalsurplus

Total
ForeignaccumuNonDeferred currency Remeasure- lated other controlling
Treasury Total share- Unrealized gains and translation ments of compre- interests in
Retained stock,holders’ gains on losses on adjustdefined
hensive consolidated
earnings at costequitysecurities hedges
ments benefit plans income subsidiaries

Total
net
assetsFor the years ended March 31, 2017
Balance at the beginning of current period .. ¥ 13,367 ¥ 3,768 ¥ 38,754 ¥Cash dividends (¥12.00 per share) ......
(992)
Profit attributable to owners of parent ..
8,551
Change in scope of consolidation .......
(55)
Purchase of treasure stock ..................
Other changes during the year, net .....
Balance at the end of current period ....... ¥ 13,367 ¥ 3,768 ¥ 46,258 ¥(232) ¥ 55,657 ¥ 3,586 ¥
(992)
8,551
(55)
(2)
(2)
1,300
(234) ¥ 63,159 ¥ 4,886 ¥(27) ¥
6(21) ¥(11) ¥
176 ¥(660) ¥ 2,888 ¥
691,392(591) ¥ 4,280 ¥264 ¥ 58,809
(992)
8,551
(55)
(2)
24
1,416
288 ¥ 67,727

For the years ended March 31, 2016
Balance at the beginning of current period .. ¥ 13,367 ¥ 3,768 ¥ 31,764 ¥Cash dividends (¥10.00 per share) ......
(827)
Profit attributable to owners of parent ..
7,817
Purchase of treasure stock ..................
Other changes during the year, net .....
Balance at the end of current period ....... ¥ 13,367 ¥ 3,768 ¥ 38,754 ¥Millions of yen(228) ¥ 48,671 ¥ 4,097 ¥
24 ¥
(827)
7,817
(4)
(4)
(511)
(51)
(232) ¥ 55,657 ¥ 3,586 ¥(27) ¥

25 ¥(36)(11) ¥(605) ¥ 3,541 ¥
(55)
(653)
(660) ¥ 2,888 ¥304 ¥ 52,516
(827)
7,817
(4)
(40)
(693)
264 ¥ 58,809

For the years ended March 31, 2017
Thousands of U.S. dollars (Note 1)
Balance at the beginning of current period .. $ 119,150 $ 33,588 $345,436 $ (2,075) $496,099 $ 31,964 $ (237) $ (100) $ (5,881) $ 25,746 $ 2,350 $524,195
Cash dividends ($0.11 per share) ........
(8,843)(8,843)(8,843)
Profit attributable to owners of parent ..
76,21776,21776,217
Change in scope of consolidation .......
(487)
(487)
(487)
Purchase of treasure stock ..................
(20)
(20)
(20)
Other changes during the year, net .....
11,58452
150
617
12,403217
12,620
Balance at the end of current period ....... $119,150 $ 33,588 $412,323 $ (2,095) $562,966 $ 43,548 $ (185) $50 $ (5,264) $ 38,149 $ 2,567 $603,682

See accompanying notes.

45

TAKUMA 2017 ANNUAL REPORTTAKUMA 2017 ANNUAL REPORT

46

Financial Information■ Consolidated Statements of Cash Flows■ Notes to Consolidated Financial Statements

TAKUMA CO., LTD. and Consolidated Subsidiaries
For the years ended March 31, 2017 and 2016

TAKUMA CO., LTD. and Consolidated Subsidiaries

Millions of yen
2017
2016

Cash flows from operating activities:
Income before income taxes ...........................................................................
Adjustments to reconcile income before income taxes
to net cash provided by operating activities:
Depreciation ...............................................................................................
Impairment loss ..........................................................................................
Increase (decrease) in allowance for doubtful accounts ................................
Increase (decrease) in allowance for bonuses ...............................................
Increase (decrease) in allowance for losses on sales contracts .......................
Increase (decrease) in net defined benefit liability .........................................
Interest and dividend income ......................................................................
Interest expense ..........................................................................................
Equity in losses (earnings) of affiliated companies ........................................
Net decrease (increase) in notes and accounts receivable and advances received ......
Decrease (increase) in inventories .................................................................
Decrease (increase) in other current assets ...................................................
Net increase (decrease) in notes and accounts payable and advance money .......
Increase (decrease) in other current liabilities ...............................................
Other ..........................................................................................................
Subtotal ..................................................................................................
Interest and dividend received .....................................................................
Interest paid ................................................................................................
Income taxes received (paid) ........................................................................
Net cash provided by operating activities .................................................

¥ 11,606¥

9,379

Thousands of
U.S. dollars(Note 1)2017

1. Basis of presenting financial statements$

The accounts of overseas subsidiaries are based on their accounting records maintained in conformity with generally accepted accounting
principles prevailing in the respective countries of domicile. However, necessary adjustments are made upon consolidation. The accompanying consolidated financial statements have been restructured and translated into English from the consolidated financial statements of
TAKUMA CO., LTD. (the “Company”) prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of
the Ministry of Finance as required by the Japanese Financial Instruments and Exchange Law. Some supplementary information included in
the statutory Japanese language consolidated financial statements, but not required for fair presentation, is not presented in the accompanying consolidated financial statements.

103,446

851
(18)
182
(1,586)
445
(337)
76
(280)
463
148
(25)
(2,143)
1,489
149
11,020405(76)(1,759)
9,590

840
267
(21)
107
(1,731)
325
(367)
105
(287)
(7,951)
(237)
42
6,867
(587)
152
6,903
623
(108)
(690)
6,728

7,585
(157)
1,623
(14,140)
3,971(3,000)673(2,491)
4,123
1,325
(224)
(19,105)
13,274
1,324
98,227
3,609(679)(15,674)
85,483

Cash flows from investing activities:
Net decrease (increase) in time deposits ..........................................................
Purchase of property, plant and equipment .....................................................
Purchase of intangible fixed assets ..................................................................
Purchase of investment securities ....................................................................
Sale of investment securities ...........................................................................
Disbursement for loans receivable ...................................................................
Collection of loans receivable ..........................................................................
Other ..............................................................................................................
Net cash provided by (used in) investing activities ........................................

3
(575)
(65)
(473)
13
(171)
1,328
83
143

42
(656)
(82)
(91)
152
(25)
243
(28)
(445)

30
(5,126)(578)(4,216)116(1,524)
11,836735
1,273

Cash flows from financing activities:
Net increase (decrease) in short-term bank loans .............................................
Payment of long-term debt .............................................................................
Purchase of treasury stock ...............................................................................
Payment of cash dividends ..............................................................................
Dividends paid to non-controlling interests .....................................................
Other ..............................................................................................................
Net cash used in financing activities ............................................................

(75)
(673)
(2)
(992)
(17)
(28)
(1,787)(100)(1,896)
(4)
(827)
(25)
(48)
(2,900)(668)(5,996)(20)(8,843)(151)(252)(15,930)

Effect of exchange rate changes on cash and cash equivalents ............................
Net increase in cash and cash equivalents ....................................................
Cash and cash equivalents at beginning of year .........................................
Increase in cash and cash equivalents from newly consolidated subsidiary ...........
Cash and cash equivalents at end of year (Note 4) .....................................

15
7,961
48,335836¥ 57,132

(56)
3,327
45,00848,335

131
70,957
430,835
7,455
509,247¥$

The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the Japanese
Financial Instruments and Exchange Law and its related accounting regulations and in conformity with accounting principles generally
accepted in Japan, which are different in certain respects as to application and disclosure requirements from International Financial Reporting Standards.

The translation of the Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan,
using the prevailing exchange rate at March 31, 2017, which was ¥112.19 to U.S.$1.00. The translations should not be construed as
representations that the Japanese yen amounts have been, could have been or could in the future be converted into U.S. dollars at this or
any other rate of exchange.

2. Summary of significant accounting policies(1) Principles of consolidation
The consolidated financial statements include the accounts of the Company and its 22 significant subsidiaries (the “Companies”).
Kurume High Trust Co., Ltd., Hokutan High Trust Co., Ltd. and Suwako High Trust Co., Ltd., which were unconsolidated subsidiaries,
have been included in the consolidation from the consolidated fiscal year ended March 31, 2017 because of their increased significance. All significant intercompany transactions and unrealized profits among the Companies have been eliminated in consolidation.
Investments in certain significant affiliates over which the Company and/or its subsidiaries are able to exert influence to a material
degree with regard to financial and operating decision making, other than consolidated subsidiaries, are accounted for by the equity
method after the elimination of unrealized intercompany profits.
Investments in the remaining unconsolidated subsidiaries and affiliated companies are not accounted for by the equity method becauseof the immaterial effect on the consolidated financial statements. Therefore, such investments are carried at cost, adjusted for any
substantial and non-recoverable decline in value. Income from those unconsolidated subsidiaries and affiliated companies is recognized
only when the Companies receive dividends therefrom.
(2) Foreign currency translation
Revenue and expense are translated at the rates of exchange prevailing on the transaction date. Assets and liabilities denominated inforeign currencies are generally translated at the rate of exchange prevailing at the balance sheet date, and the resulting translation
gains and losses are included in earnings.
The financial statements of a consolidated overseas subsidiary are translated into Japanese yen at the year-end rate, except that net
asset accounts are translated at historical rates and income statement items resulting from transactions with the Company aretranslated at rates used by the Company. The resulting translation adjustments are shown as “Foreign currency translation adjustments,” a separate component of net assets.
(3) Cash and cash equivalents
In preparing the consolidated statements of cash flows, cash and cash equivalents include cash on hand, readily available deposits andshort-term investments with maturities not exceeding three months from the date of acquisition and which have high liquidity and low
risk of price fluctuation.
(4) Securities
Equity securities issued by subsidiaries and affiliated companies which are not consolidated or accounted for using the equity method
are stated at cost determined by moving average cost. Available-for-sale securities with available fair market value are stated at fairmarket value, and unrealized gains and losses on these securities are reported net of applicable income taxes as a separate componentof net assets. Realized gains and losses on the sale of such securities are computed at cost using moving average cost. Available-for-salesecurities with no available fair market value are stated at cost determined by moving average cost.
If the market value of equity securities issued by unconsolidated subsidiaries and affiliated companies or available-for-sale securities
declines significantly, such securities are stated at fair market value and the difference between fair market value and the carrying
amount is recognized as loss in the period of the decline. If the fair market value of such securities is not readily available, such securities
should be written down to net asset value with a corresponding charge in the income statement in the event the net asset value
declines significantly. In these cases, the fair market value or the net asset value will be the carrying amount of the securities at the
beginning of the next year.
(5) Allowance for doubtful accounts
The Companies provide an allowance for doubtful accounts by estimating the uncollectible amounts of certain individual accounts andby applying a percentage based on collection experience to the remaining receivables.

See accompanying notes.

47

TAKUMA 2017 ANNUAL REPORTTAKUMA 2017 ANNUAL REPORT

48

Financial Information(6) Inventories
Merchandise and finished goods are stated at cost using the moving average method. Work-in-process is stated at cost determined by
the identified cost method. Materials and supplies are stated at cost using the average method. For these inventories, the carrying
amounts on the balance sheet are written down to reflect decreases in profitability.
(7) Property, plant and equipment
Property, plant and equipment are depreciated principally using the declining balance method over the estimated useful life of theasset. However, buildings acquired after March 31, 1998 and facilities attached to buildings and structures acquired after March 31,
2016 are depreciated using the straight-line method. The range of useful lives is principally from 3 to 60 years for buildings andstructures and from 2 to 20 years for machinery, equipment and other. Maintenance and repairs, including minor renewals andimprovements, are charged to income as incurred.
Lease assets under finance leases in which the ownership of the lease assets is not transferred to the lessee are depreciated using thestraight-line method over the lease term with an assumption of no residual value.
(8) Allowance for losses on sales contracts
For sales orders on hand at the balance sheet date for projects in which the estimated cost is expected to exceed the price of the orderby a wide margin, an allowance for losses on sales contracts is recognized at the estimated aggregate amount.
(9) Allowance for guarantees on completed work
Allowance for guarantees on completed work is based on estimated amounts of expenditure in the warranty period after products aredelivered.
(10) Allowance for directors’ and executive officers’ retirement benefits
Directors and executive officers are generally entitled to receive retirement benefits based on the Companies’ internal rules. The
Companies provide an allowance for directors’ and executive officers’ retirement benefits based on the amount that would be
required if all directors and executive officers retired at the balance sheet date.
(11) Net defined benefit liability
In calculating retirement benefit obligations, the method of attributing expected benefits to period employs principally a benefit formulabasis. Actuarial gains and losses are recognized in expenses using the straight-line method principally over 10 years commencing withthe following period. Prior service costs are recognized in expenses using the straight-line method principally over 10 years.
(12) Revenue recognition
When the outcome of an individual contract can be estimated reliably, the domestic companies apply the percentage-of-completion
method to work performed during the year, otherwise, the completed contract method is applied. The degree of completion, or thepercentage of the contract performed during the period under review, is measured by the proportion of the cost incurred during theperiod to the estimated total cost.
(13) Income taxes
The Companies are subject to corporation tax, inhabitants tax and enterprise tax based on taxable income. The Companies recognize
the tax effects of the temporary differences between the carrying amounts of assets and liabilities for tax and financial reporting. The
provision for income taxes is computed based on the pretax income of each of the Companies, with certain required adjustments. The
asset-liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary
differences.
The Companies have adopted the consolidated tax return system.
(14) Net income and cash dividends per share
Net income per share is computed based on the weighted average number of shares of common stock outstanding during each period.
Diluted net income per share is computed with the assumption that all convertible bonds were converted into common stock at the
beginning of each period. Cash dividends per share represent interim dividends declared by the Board of Directors in each year andyear-end dividends approved by the shareholders at the annual meeting held subsequent to the end of the fiscal year.
(15) Derivatives and hedge accounting
The Companies generally state derivative financial instruments at fair value and recognize changes in the fair value as gains or losses
unless the derivative financial instruments are used for hedging purposes. If derivative financial instruments are used as hedges andmeet certain hedging criteria, the Companies generally defer recognition of gain or loss resulting from a change in the fair value of thederivative financial instrument until the related loss or gain on the hedged item is recognized.
The Companies use currency forward contracts to hedge accounts receivable and payable denominated in foreign currencies (mainly
U.S. dollars) against the risk of fluctuation in exchange rates that comes from foreign currency transactions.
Certain foreign exchange contracts are subject to appropriation if they satisfy the requirements of appropriation treatment.
Interest rate swaps that qualify for hedge accounting and meet specific matching criteria are not re-measured at market value.
(16) Reclassifications
Certain prior year amounts have been reclassified to conform to the 2017 presentation.

49

TAKUMA 2017 ANNUAL REPORT

3. Changes in accounting policies
Due to amendments to the Japanese Corporation Tax Act, the company and its domestic subsidiaries adopted “Practical Solution on achange in depreciation method due to Tax Reform 2016” (Practice Issue Task Force No.32, June 17, 2016 (hereinafter, “PITF No.32”))
from the current fiscal year and changed the depreciation method for facilities attached to buildings and structures acquired after March
31, 2016, from the declining balance method to the straight line method.
The application of the amendments have had little effect on the consolidated financial statements.

4. Cash and cash equivalents
Amounts of cash and cash equivalents as of March 31, 2017 and 2016 were reconciled with cash and time deposits as follows:

Cash and time deposits ................................................................
Time deposits with maturities exceeding three months
from the date of acquisition .....................................................
Total cash and cash equivalents ....................................................

¥¥

Millions of yen
2017
57,719¥2016
48,916

Thousands of U.S. dollars
2017$
514,475¥(581 )
48,335$

Millions of yen
2017
476
¥
1,911
1,510
3,897
¥

2016
539
2,066
1,436
4,041

Thousands of U.S. dollars
2017
$
4,247
17,035
13,462$
34,744(587 )
57,132(5,228 )509,247

5. Inventories
Inventories were summarized as follows:

Merchandise and finished goods ..................................................
Work-in-process ...........................................................................
Materials and supplies .................................................................
Total inventories ..........................................................................

¥¥

6. Financial instruments(1) Status of financial instruments(a) Financial instruments policy
Under Group policy, investment in financial instruments is limited primarily to short-term deposits and bank loans for raising funds.
Derivative transactions are used to hedge risks of fluctuations in foreign exchange and interest rates.
(b) Financial instruments, risks and risk management structure
The Companies are working to reduce customer credit risk associated with notes and accounts receivable and operating receivables
through customer based due dates and other balance controls in accordance with the Companies’ regulations. Investment securities
consists mainly of stocks and are periodically checked for the fair value of the listed shares.
Long-term loans receivable are made mainly to affiliated companies whose financial status is checked periodically.
Notes and accounts payables, or operating payables, are due within one year.
Short-term financing is primarily for operating funds while long-term debt is for capital investment.
With floating rate loans, which are exposed to interest rate fluctuation risk, Group companies use derivative transactions (interest rate
swaps) as a part of their long-term loans to hedge the risk of interest rate fluctuation on bank loans and to fix interest payments.
To cope with operating receivables and loans exposed to liquidity risk, each Group company manages its cash position by preparing
monthly cash-flow plans and other means.
(c) Supplementary remarks on fair values of financial instruments
The fair values of financial instruments do not reflect the market risks concerning the derivative trading.
(2) Fair value of financial instruments
Amounts recognized on the consolidated balance sheets, fair values and differences as of March 31, 2017 and 2016, except items forwhich no fair value was obtainable, were as follows:(Cash and time deposits)
The fair value of cash and time deposits is based on relevant book value because they are mostly settled within a short period of time andthe fair value is nearly equal to the book value.

Amounts recognized on the consolidated balance sheets .............
Fair value .....................................................................................
Difference ....................................................................................

¥¥

Millions of yen
2017
57,719¥57,719¥2016
48,916
48,916-

Thousands of U.S. dollars
2017$
514,475
514,475$-

TAKUMA 2017 ANNUAL REPORT

50

Financial Information(Notes and accounts receivable)
The fair value of notes and accounts receivable is based on the relevant book value because they are mostly settled within a short periodof time and the fair value is nearly equal to the book value.
Millions of yen
Amounts recognized on the consolidated balance sheets .............
Fair value .....................................................................................
Difference ....................................................................................

¥
¥

2017
44,95444,954-¥¥

2016
45,17845,178-

Thousands of U.S. dollars
2017$
400,694
400,694$-(Investment securities)
The fair value of stocks is based on stock exchange prices, and the fair values of bonds are based on stock exchange prices or prices
provided by financial institutions.
Millions of yen
Amounts recognized on the consolidated balance sheets .............
Fair value .....................................................................................
Difference ....................................................................................

¥
¥

2017
13,071
13,071-¥¥

2016
11,051
11,051-Thousands of U.S. dollars
2017$
116,511
116,511$-(Long-term loans receivable)
The fair value of long-term loans receivable is calculated by a method that discounts total principal plus interest by an assumed interest
rate for a similar new loan.
Millions of yen
Amounts recognized on the consolidated balance sheets .............
Fair value .....................................................................................
Difference ....................................................................................

¥
¥

2017
913
910
(3 )

¥
¥

2016
964
962
(2 )

Thousands of U.S. dollars
2017
$
8,136
8,114
$
(22 )

(3) Redemption schedule of monetary assets with contractual maturities and repayment schedule of short-term loans payable and long-term
debtMillions of yen
As of March 31, 2017
Cash and time deposits ..................
Notes and accounts receivable ........

Less than
1 year¥ 57,719
43,9281 to 2 years¥
1,026

2 to 3 years¥-

3 to 4 years¥-

4 to 5 years¥-

More than
5 years¥-

Investment securities ......................
Long-term loans receivable .............
Total ..............................................

¥ 101,647

¥

161
1,187

135
135

189
189

55
55

373
373

Short-term loans payable ...............
Long-term debt ..............................
Total ..............................................

¥

¥

¥

As of March 31, 2016
Cash and time deposits ..................
Notes and accounts receivable ........

Less than
1 year¥ 48,916
43,745

1 to 2 years¥
1,433

2 to 3 years¥-

3 to 4 years¥-

4 to 5 years¥-

More than
5 years¥-

Investment securities ......................
Long-term loans receivable .............
Total ..............................................

¥ 92,661

¥

223
1,656

131
131

106
106

160
160

344
344

Short-term loans payable ...............
Long-term debt ..............................
Total ..............................................

¥

¥

¥

As of March 31, 2017
Cash and time deposits ..................
Notes and accounts receivable ........

Less than
1 year
$ 514,475
391,553

1 to 2 years$
9,141

2 to 3 years$-

3 to 4 years$-

4 to 5 years$-

More than
5 years$-

Amounts recognized on the consolidated balance sheets .............
Fair value .....................................................................................
Difference ....................................................................................

¥
¥

2016
35,12035,120-Thousands of U.S. dollars
2017$
292,998
292,998$-

Investment securities ......................
Long-term loans receivable .............
Total ..............................................

$ 906,028

1,434$ 10,575

$

1,201
1,201

1,688
1,688

488
488

3,325
3,325

(Short-term loans payable)
The fair value of short-term loans payable is based on the relevant book value because they are settled within a short period of time andthe fair value is nearly equal to the book value.

Short-term loans payable ...............
Long-term debt ..............................
Total ..............................................

$ 68,411
4,169$ 72,580$$

Millions of yen
Amounts recognized on the consolidated balance sheets .............
Fair value .....................................................................................
Difference ....................................................................................

¥
¥

2017
7,675
7,675
-

¥
¥

2016
7,750
7,750
-

Thousands of U.S. dollars
2017$
68,411
68,411$-(Long-term debt)
The fair value of long-term debt is calculated by a method that discounts total principal plus interest by an assumed interest rate for asimilar new loan. Short-term financing is primarily for operating funds, while long-term debt is for capital investment.
Millions of yen
Amounts recognized on the consolidated balance sheets .............
Fair value .....................................................................................
Difference ....................................................................................

¥
¥

2017
1,397
1,404
7

¥
¥

2016
2,069
2,080
11

Thousands of U.S. dollars
2017$12,447
12,513$66

Items for which no fair value was obtainable(Non-listed equity securities)

Amounts recognized on the consolidated balance sheets
Equity securities issued by affiliates ...............................................
Debt securities issued by affiliates .................................................
Other ...........................................................................................

51

TAKUMA 2017 ANNUAL REPORT¥

Millions of yen
2017
4,041
¥
90

2016
4,548
50
85

Thousands of U.S. dollars
2017$
36,023
800

470
470

¥

¥
¥

117
117

¥
¥

80
80

¥

¥
¥
¥

182
182

¥
¥

80
80

¥

Millions of yen(Notes and accounts payable)
The fair value of notes and accounts payable is based on the relevant book value because they are mostly settled within a short period oftime and the fair value is nearly equal to the book value.
Millions of yen
2017
32,871¥32,871
¥

7,675
468
8,143

¥

7,750
673
8,423

¥

468
468

¥

¥
¥

470
470

¥
¥

116
116

¥

¥
¥
¥

80
80

¥
¥

262
262

¥

Thousands of U.S. dollars

$

4,188
4,188

$

1,040
1,040

$
$

713
713

$

$
$
$

1,624
1,624

$
$
$

713
713

7. Securities
Acquisition costs and book values of available-for-sale securities with available fair values as of March 31, 2017 and 2016 were as
follows:
As of March 31, 2017
Securities with book values exceeding acquisition costs:
Equity securities .....................................................................
Subtotal ................................................................................
Securities with book values not exceeding acquisition cost:
Equity securities .....................................................................
Subtotal ................................................................................
Total ......................................................................................

Acquisition cost

Millions of yen
Book value¥¥

As of March 31, 2016
Securities with book values exceeding acquisition costs:
Equity securities .....................................................................
Subtotal ................................................................................
Securities with book values not exceeding acquisition costs:
Equity securities .....................................................................
Subtotal ................................................................................
Total ......................................................................................

Acquisition cost

Millions of yen
Book value

¥

¥

¥

¥

5,954
5,954
81
81
6,035

5,139
5,139
743
743
5,882

¥

¥

13,00813,008¥63
63
13,071

10,356
10,356695
695
11,051

Difference

¥

7,054
7,054
(18 )
(18 )
7,036

Difference
¥

¥

5,217
5,217
(48 )
(48 )
5,169

TAKUMA 2017 ANNUAL REPORT

52

Financial Information

As of March 31, 2017
Securities with book values exceeding acquisition costs:
Equity securities .....................................................................
Subtotal ................................................................................
Securities with book values not exceeding acquisition costs:
Equity securities .....................................................................
Subtotal ................................................................................
Total ......................................................................................

Acquisition cost$$

53,07253,072722
722
53,794

10. Employees’ retirement benefits

Thousands of U.S. dollars
Book value$$

115,951
115,951
560
560
116,511Difference$$

62,87962,879(1) Outline of adopted retirement benefit scheme
The Companies provide three types of post-employment benefit plans, unfunded lump-sum payment plans, funded non-contributory
pension plans and defined contribution plans, under which all eligible employees are entitled to benefits based on the level of wages
and salary at the time of retirement or termination, length of service and certain other factors.

(162 )(162 )
62,717(2) Defined benefit plans
Movement in retirement benefit obligations (except plan applied simplified method) for the years ended March 31, 2017 and 2016
was as follows:

8. Pledged assets
The following assets were pledged to secure short-term loans payable, long-term debt, contingent liabilities under guarantees for bankloans of affiliated companies and fulfillment of contracts as of March 31, 2017 and 2016:

Buildings and structures ................................................................
Machinery and equipment .............................................................
Land .............................................................................................
Investment securities .....................................................................
Cash and time deposits .................................................................
Time deposits as construction contract guarantees ........................
Total .............................................................................................

¥¥

Millions of yen
2017
270
¥
48
94
450
237
73
1,172
¥

2016
342
61
94
150
218
57
922

Thousands of U.S. dollars
2017
$
2,406
431
839
4,011
2,115
646
$
10,448

9. Short-term loans payable and long-term debt
Short-term loans payable as of March 31, 2017 and 2016 were as follows:

Secured .........................................................................................
Unsecured .....................................................................................

¥¥

Millions of yen
2017
175
¥
7,500
7,675
¥

2016
650
7,100
7,750

Thousands of U.S. dollars
2017
$
1,560
66,851$
68,411

Balance at April 1, 2016 and 2015 ................................................
Service cost ................................................................................
Interest cost ...............................................................................
Actuarial loss (gain) ...................................................................
Benefits paid .............................................................................
Balance at March 31, 2017 and 2016 ............................................

¥

¥

2017
Secured .........................................................................................
Unsecured .....................................................................................

¥
¥

70
398
468

2016
¥

68
605
673

¥

Thousands of U.S. dollars
2017
$
621
3,548
$
4,169

Balance at April 1, 2016 and 2015 ................................................
Retirement benefit costs ............................................................
Contributions paid by the employer ...........................................
Benefits paid .............................................................................
Other ........................................................................................
Balance at March 31, 2017 and 2016 ............................................

Secured .........................................................................................
Unsecured .....................................................................................

¥¥

Millions of yen
2017
109
¥
820
929
¥

2016
178
1,218
1,396

The annual average interest rate applicable to bank loans at March 31, 2017 and 2016 was as follows:
Short-term loans payable ..............................................................
Current portion of long-term debt .................................................
Long-term debt .............................................................................

2017
0.6%
1.2
2.0

2016
0.7%
1.6
1.7

Thousands of U.S. dollars
2017
$
967
7,311
$
8,278

Thousands of U.S. dollars
2017$
72,136
5,034
389
118
(2,396)$75,281¥¥Millions of yen
2017
575
¥
78
(34)
(58)
4
565
¥

2016
560
113
(48)
(43)
(7)
575

Thousands of U.S. dollars
2017
$
5,124
697
(309)
(514)
38
$
5,036

Reconciliation from retirement benefit obligations and plan assets to net defined benefit liability as of March 31, 2017 and 2016 was asfollows:

Funded retirement benefit obligations ...........................................
Plan assets ....................................................................................

¥

Unfunded retirement benefit obligations .......................................
Total net defined benefit liability (asset) at March 31, 2017 and 2016 ....
Net defined benefit liability ............................................................
Total net defined benefit liability (asset) at March 31, 2017 and 2016 ....

Long-term debt as of March 31, 2017 and 2016 was as follows:

2016
7,734
546
53
141
(381)
8,093

Movement in net defined benefit liability of plan applied simplified method for the years ended March 31, 2017 and 2016 was asfollows:

Current portion of long-term debt as of March 31, 2017 and 2016 was as follows:
Millions of yen

Millions of yen
2017
8,093
¥
565
44
13
(269)
8,446
¥

¥

Millions of yen
2017
602
¥
(434)
168
8,843
9,011
9,011
9,011

2016
613
(424)
189
8,479
8,668

¥

8,668
8,668

Millions of yen
2017
565
¥
44
162
(49)
78

2016
546
53
134
(49)
113

Thousands of U.S. dollars
2017
$
5,361
(3,869)1,492
78,82580,317$80,31780,317Retirement benefit costs for the years ended March 31, 2017 and 2016 were as follows:

Service cost ...................................................................................
Interest cost ..................................................................................
Amortization of actuarial differences .............................................
Amortization of prior service cost ..................................................
Retirement benefit costs based on the simplified method ...............
Total retirement benefit costs for the fiscal years ended
March 31, 2017 and 2016 ..........................................................

¥

¥

800

¥

797

Thousands of U.S. dollars
2017
$
5,034
389
1,445
(437)
697
$

7,128

Remeasurements of defined benefit plans for the years ended March 31, 2017 and 2016 were as follows:
Millions of yen
2017
Prior service costs ..........................................................................
Actuarial gains and losses ..............................................................
Total remeasurements of defined benefit plans for the fiscal years
ended March 31, 2017 and 2016 ................................................

53

TAKUMA 2017 ANNUAL REPORT

¥

(49)
149

¥

2016
(49)
(7)

¥

100

¥

(56)

Thousands of U.S. dollars
2017
$
(437)
1,326
$

889

TAKUMA 2017 ANNUAL REPORT

54

Financial Information

Accumulated remeasurements of defined benefit plans as of March 31, 2017 and 2016 were as follows:

14. Research and development expenses

Millions of yen
2017
Prior service costs yet to be recognized ..........................................
Actuarial gains and losses yet to be recognized ..............................
Total balance at March 31, 2017 and 2016 ...................................

¥

59
(910)
(851)

¥

¥
¥

2016
108
(1,059)(951)

Thousands of U.S. dollars
2017
$
523
(8,107)$(7,584)

Research and development expenses are charged to income as incurred. Such expenses included in cost of sales and selling, general andadministrative expenses for the years ended March 31, 2017 and 2016 were as follows:¥

Millions of yen
2017
973
¥

Thousands of U.S. dollars
2017
$
8,669

2016
743

The principal actuarial assumptions at March 31, 2017 and 2016 were as follows:
Discount rate
Expected rate of salary increase

2017
principally 0.64%
principally 6.4%

15. Income taxes

2016
principally 0.64%
principally 7.0%

The Companies are subject to a number of taxes based on income, which, in the aggregate, indicated a statutory rate in Japan ofapproximately 30.8% and 33.0% for the years ended March 31, 2017 and 2016, respectively.

(3) Defined contribution plan
The amount of contribution required for the defined contribution plans of the Companies for the years ended March 31, 2017 and2016 was ¥130 million ($1,163 thousand) and ¥136 million, respectively.

11. Contingent liabilities
The Companies were contingently liable under guarantees for bank loans of affiliated companies and other companies as of March 31,2017 and 2016 as follows:

Unsecured ...................................................................................

¥

Millions of yen
2017
284
¥

2016
502

Thousands of U.S. dollars
2017
$
2,534

The significant differences between the statutory tax rate and the Companies’ effective tax rate for financial statement purposes were set
forth in the table below.
Statutory tax rate ............................................................................

2017
30.8%

2016
33.0%

Nondeductible expenses ..................................................................
Dividend income .............................................................................
Equity in earnings of affiliated companies ........................................
Council tax ......................................................................................
Decrease in deferred tax assets resulting from change in statutory rate ..
Tax credits .......................................................................................
Valuation allowance ........................................................................
Other ..............................................................................................
The Companies’ effective tax rate ....................................................

1.1(0.2 )(0.7 )
0.6
0.2(2.4 )
0.0(3.3 )
26.1%

1.0
(0.4)
(1.0)
0.7
2.4
(2.0)
(20.1)
3.1
16.7%

12. Net assets
Under Japanese laws and regulations, the entire amount paid for new shares is required to be designated as common stock. However, acompany may, by a resolution of the Board of Directors, designate an amount not exceeding one half of the price of the new shares asadditional paid-in capital, which is included in capital surplus.

Components of the Companies’ deferred tax assets and liabilities as of March 31, 2017 and 2016 were as follows:
Millions of yen
2017

Under the Japanese Corporate Law (the “Law”), in cases in which a dividend distribution of surplus is made, the smaller of an amountequal to 10% of the dividend or the excess, if any, of 25% of common stock over the total of additional paid-in capital and legal earnings
reserve must be set aside as additional paid-in capital or legal earnings reserve. Legal earnings reserve is included in retained earnings in
the accompanying consolidated balance sheets.
Under the Law, legal earnings reserve and additional paid-in capital can be used to eliminate or reduce a deficit or be capitalized by aresolution of the shareholders’ meeting.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Law, all additional paid-in capital andall legal earnings reserve may be transferred to other capital surplus and retained earnings, respectively, which are potentially available fordividends.
The maximum amount that the Company can distribute as dividends is calculated based on the nonconsolidated financial statements of
the Company in accordance with Japanese laws and regulations.
The appropriation of retained earnings with respect to a given financial year is made by resolution of the shareholders at a general
meeting held subsequent to the close of such financial year. The accounts for that year do not, therefore, reflect such appropriations.

13. Provision for losses on sales contracts
Provision for losses on sales contracts included in cost of sales for the years ended March 31, 2017 and 2016 was as follows:
Millions of yen
2017
¥

55

TAKUMA 2017 ANNUAL REPORT

2016
10

¥

29

Deferred tax assets:
Net defined benefit liability ..................................................
Accrued cost of sales ............................................................
Impairment loss ...................................................................
Allowance for losses on sales contracts .................................
Loss carryforwards for tax purposes ......................................
Other ...................................................................................
Total deferred tax assets .......................................................
Valuation allowance .............................................................
Net deferred tax assets .........................................................
Deferred tax liabilities:
Unrealized gains on securities...............................................
Valuation difference in land of consolidated subsidiary .........
Other ...................................................................................
Total deferred tax liabilities ...................................................
Net deferred tax assets .........................................................

¥

¥
¥

¥

2016

2,782
1,348
1,262
1,199
810
3,662
11,063(4,112)
6,951¥(2,135)(152)(168)(2,455)
4,496

¥

¥

¥

Thousands of U.S. dollars
2017

2,669
1,150
1,260
1,524
1,214
3,473
11,290(4,110)7,180$(1,568)(152)(198)(1,918)
5,262

$

$

$

24,797
12,014
11,24910,686
7,227
32,63998,612(36,652)
61,960(19,029)(1,357)(1,500)(21,886)
40,074

Adjustment of deferred tax assets and liabilities for enacted changes in tax laws and rates
Since amendments to the Japanese tax regulations were enacted into law on November 18, 2016, the statutory tax rate utilized for themeasurement of deferred tax assets and liabilities in the current fiscal year changed from the previous year.
The application of the amendments have had little effect on the consolidated financial statements.

Thousands of U.S. dollars
2017
$
88

TAKUMA 2017 ANNUAL REPORT

56

Financial Information

16. Comprehensive income
Amounts reclassified to net income in the current period that were recognized in other comprehensive income in the current or previous
periods and the tax effects for each component of other comprehensive income were as follows:
Millions of yen
2017
Unrealized gains on securities
Increase (decrease) during the year .....................................
Reclassification adjustments ...............................................
Subtotal, before tax ...........................................................
Tax (expense) or benefit .....................................................
Subtotal, net of tax ............................................................
Deferred gains and losses on hedges
Increase (decrease) during the year .....................................
Reclassification adjustments ...............................................
Subtotal, before tax ...........................................................
Tax (expense) or benefit .....................................................
Subtotal, net of tax ............................................................
Foreign currency translation adjustments
Increase (decrease) during the year .....................................
Reclassification adjustments ...............................................
Subtotal, before tax ...........................................................
Tax (expense) or benefit .....................................................
Subtotal, net of tax ............................................................
Remeasurements of defined benefit plans
Increase (decrease) during the year .....................................
Reclassification adjustments ...............................................
Subtotal, before tax ...........................................................
Tax (expense) or benefit .....................................................
Subtotal, net of tax ............................................................
Total other comprehensive income ................................................

¥

¥

¥

¥

¥

¥

¥

Thousands of U.S. dollars
2017

2016

1,866
(0)
1,866
(567)
1,299

(29)
(29)
(0)
(29)

23
23
23

¥

¥

¥

¥

¥

¥

(879)
(0)
(879)
368
(511)

(64)
(64)
23
(41)

$

$

$

$

16,640(0)
16,640(5,058)
11,582

(259)
(259)
(3)
(262)

(55)
(55)
(55)

$

$

$

(118)
1,007
889
(272)
617

$

12,137

¥

¥

(13)
113
100
(31)
69

¥

(140)
84
(56)
2
(54)

¥

1,362

¥

(661)

$

200
200
200

17. Segment information(Supplemental information – Accounting Standard for Disclosures about Segments of an Enterprise and Related Information)(1) General information about reportable segments
In the Group, businesses for which separate financial information is available are grouped into the following four reporting segmentsin accordance with the similarity of products and services of the respective business. The results of each reporting segment are
reviewed periodically by the Board of Directors to assess the segment’s business performance.
Domestic Environment and Energy
General waste treatment plants, industrial waste treatment plants, waste recycling plants, wastewater treatment plants, sludge
combustion plants, biomass power plants and gas-turbine cogeneration systems
Overseas Environment and Energy
Waste combusting power plants and biomass power plants
Package Boiler
Compact through-flow boilers and vacuum water heating systems
Equipment and System Business
Construction equipment, equipment for semi-conductor industry and cleaning systems(2) Basis of measurement about reported segment profit or loss and other material items
Accounting methods used for reporting segments are the same those explained in the Note 2, “Summary of significant accounting
policies.”
Profits of reporting units are operating income. Internal revenue and transfers between reporting segments are recorded using
prevailing market prices.

57

TAKUMA 2017 ANNUAL REPORT(3) Information about reported segment profit or loss and other material items
Reportable segment information for the years ended March 31, 2017 and 2016 was as follows:Year ended March 31, 2017
Sales:
Outside customers ..........................
Intersegment ..................................
Total ..........................................
Reportable segment income (loss) .......
Others:Depreciation ..................................

Year ended March 31, 2016
Sales:
Outside customers ..........................
Intersegment ..................................
Total ..........................................
Reportable segment income (loss) .......
Others:Depreciation ..................................

Year ended March 31, 2017
Sales:
Outside customers ..........................
Intersegment ..................................
Total ..........................................
Reportable segment income (loss) .......
Others:Depreciation ..................................

Domestic
Environment
and Energy

Overseas
Environment
and Energy¥ 90,311
332
90,643¥ 11,727

¥

¥

2,222
0
2,222
(154)

¥

¥

13

605

Domestic
Environment
and Energy

Overseas
Environment
and Energy¥ 88,292
202
88,494¥ 9,834

¥

¥

830
830
(223)

¥

¥

12

608

Domestic
Environment
and Energy

Overseas
Environment
and Energy$ 804,984
2,961
807,945$ 104,525$$

19,8071
19,808(1,374)

$

$

114

5,397

Package
BoilerMillions of yen
Equipment
and System
Business¥ 17,12837
17,165
¥
917

¥

¥

6,648
18
6,666
322

¥

¥

23

179

Package
BoilerAdjustment

Consolidated¥ 116,309
387
116,696¥ 12,812

¥

¥

(387)
(387)
(1,838)¥ 116,309
116,309¥ 10,974¥¥

31

Millions of yen
Equipment
and System
Business¥ 16,31575
16,390
¥
896

¥

¥

7,651
13
7,664
352

¥

¥

25

144

Total

820

Total

$

$

59,255
162
59,417
2,872

$

$

203

1,595

851

Adjustment

Consolidated¥ 113,088
290
113,378¥ 10,859

¥

¥

(290)
(290)
(1,670)¥ 113,088
113,088¥ 9,189

¥

¥

51

789

Thousands of U.S. dollars
Equipment
Packageand System
BoilerBusiness
Total$ 152,671
328
152,999
$
8,171

¥

¥

840

Adjustment

Consolidated$ 1,036,717
3,452
1,040,169$ 114,194$$(3,452)(3,452)(16,379)$ 1,036,717
1,036,717$ 97,815

$

$

276

7,309

$

7,585

Adjustments in reportable segment income (loss) include eliminations of transactions between segments and corporate expenses notallocated to reportable segment expenses, including selling, general and administrative expenses not attributable to reportable segments.
Total reportable segment income (loss) is adjusted with operating income reported on the Consolidated Statements of Operations.
Disclosure of information relating to segment assets is omitted since assets are not allocated to business segments.
(Related information)
Reportable segment information for the years ended March 31, 2017 and 2016 was as follows:(1) Information about products and services
Disclosure of this information is omitted since similar information is disclosed in Note 17, “Segment information.”(2) Information about geographic areas
Revenues
Since over 90% of net sales reported on the Consolidated Statements of Operations were sales to outside customers within Japan,
disclosure of this information is omitted.
Tangible fixed assets
Since 90% of tangible noncurrent assets reported on the consolidated balance sheet (in terms of values) were located within Japan,
disclosure of this information is omitted.
(3) Information about major customers
Since no outside customer accounted for 10% or more of net sales reported on the income statement, disclosure of this information isomitted.

TAKUMA 2017 ANNUAL REPORT

58

Financial Information(Information related to noncurrent asset impairment loss by reporting segment)

Year ended March 31, 2017
Impairment loss ..............................

Year ended March 31, 2016
Impairment loss ..............................

Year ended March 31, 2017
Impairment loss ..............................

Domestic
Environment
and Energy

Overseas
Environment
and Energy

Package
Boiler

¥

¥

¥

-

-

Domestic
Environment
and Energy

Overseas
Environment
and Energy

Package
Boiler

¥

¥

¥

267

-

Millions of yen
Equipment
and System
Business
-

¥

-

Total
¥

Millions of yen
Equipment
and System
Business
-

¥

-

-

Total
¥

267

Domestic
Environment
and Energy

Overseas
Environment
and Energy

Thousands of U.S. dollars
Equipment
Packageand System
BoilerBusiness
Total

$

$

$

-

-

-

$

-

$

-

Adjustment

Consolidated

¥

¥

-

-

Adjustment

Consolidated

¥

¥

-

267

Adjustment

Consolidated

$

$

-

-

(Information related to amortization and unamortized balance of goodwill)
Not applicable(Information related to gain on negative goodwill by reporting segment)
Not applicable

59

TAKUMA 2017 ANNUAL REPORTTAKUMA 2017 ANNUAL REPORT

60

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