Leveraging+TAKUMA value
for a better future
Founder Tsunekichi Takuma established Takuma Boiler Manufacturing Co., Ltd.,

Municipal solid waste treatment plants

Energy plants

We support the realization of a Sound Material-Cycle
Society using advanced waste treatment technologies that meet the needs of local communities.

Takuma's core technologies are utilized in various
types of boilers, from biomass boilers, to total systems.

Waste incineration plants
Pyrolysis gasiﬁcation andmelting plants
Resource recycling andrecovery plants
Bulky waste crushing plants
Bottom ash and ﬂy ash
melting plants

Refuse derived solid fuelconversion plants
Transition and intermediate
processing plants
Raw fuel (biogas) recovery
plantsVarious types of pollution
prevention equipment

Biomass boilers
Fossil fuel boilers
Waste heat boilers
Power plants

the forerunner of today's Takuma, more than 80 years ago.
The founding spirit of this then young company,
Serve society through boiler manufacturing mirrored the thinking of Tsunekichi,
who poured his energy into inventing Japan's ﬁrst domestically manufactured boiler,
and it remains the foundation of Takuma's Management Principles today.
Takuma continues to provide new value for society through plants that leverage
proprietary combustion technology, waste treatment technology,
water treatment technology, and other technologies developed since its founding.

Waste incineration plants

Bulky waste crushing plants

Water treatment plants

Using advanced incineration technologies, weproperly treat toxic substances suitably and help
the industry's environmental protection eﬀorts.

We are working to purify wastewater with a holistic
perspective through a dialogue with water.
Sewage and wastewater
treatment plants
Various types of advanced
sewage treatment plants
Sludge treatment plants

Sewage sludge-fueled
power plants
Landﬁll leachate treatment
plantsIndustrial waste treatment plant Plant that generates power fromindustrial waste and provides
heat to a plantation

Upﬂow moving-bed sandﬁltration system

Sewage sludge-fueled power plant

General-purpose boilers

Air-conditioning equipment and clean systems

As the convergence of Takuma s combustion
technologies, our boilers are a reliable brand that has
earned the support of a wide range of industries.

We provide comfortable, clean environments to customers
in the semiconductor industry as well as many locations
such as universities, research institutions, and hospitals.

Steam Boilers (EQOS, Super EQOS)
Vacuum-type Water Heaters (Vacotin Heater)
Heat Medium Oil Boilers (Thermoheater)
Flue and Smoke Tube Boilers (RE Boiler)
Package Water-tube Boilers

Vacotin Heater
Super EQOS

Building equipment
Air-conditioning equipment
Cleaning and drying devices
Clean rooms
Clean devices
Chemical air ﬁlters

RE Boiler

Thermoheater

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

01

Waste heat boiler

Industrial waste treatment plants

Industrial waste treatment plants

SINCE1938

Biomass power generation boiler

Clean oven

Clean booths

Chemical air ﬁlters

TAKUMA 2021 ANNUAL REPORT

02

Contents

Company Motto

Value Technology,
Value People,
Value the EarthManagement
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 are needed and recognized as valuable in society.
The founding spirit of Takuma was Serve society through boiler manufacturing ,* which in present-day
language means to contribute to society by supplying goods and services that we provide . This spirit
can also be applied to the concept 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.
*Serve society through boiler manufacturing: It was the Company Motto of Takuma, then Takuma Boiler Manufacturing Co., Ltd., foundedby Tsunekichi Takuma, one of the ten great inventors of Japan during the Meiji and Taisho
periods (1868-1926).

+TAKUMA
Takuma Group
Ethics Charter

Financial Highlights

05

Company Outline

07

Message from Top Management

09

Vision 2030 Long-Term Vision

13

Implementing ESG Management15

2. We shall act in good faith in accordance with sound business custom,
while complying with applicable laws and regulations and committing ourselves to fair,transparent and free competition, as well as conducting lawful business activities.

Key Issues (Materiality) for the Takuma Group16

Medium-Term Management Plan

19

3. We shall never have any relationship with antisocial forces or such organizations,which may pose a threat to the social order and security of civil society.

Business Strategies

25

Our Achievements

35

Corporate Governance

37

Executive Proﬁles

41

Strengthening risk management

43

IR Activities / Stock Information

44

Status of Business Activities

46

Financial Statement

53

Takuma and the Takuma Group companies believe that it is essential for the sound developmentof the Group that all of the directors and employees remain aware of our social responsibilities andthe circumstances surrounding us as well as act in response to social ethics complying withapplicable 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.

1. We shall strive for a proactive social contribution while establishing a harmonious
coexistence with the global environment as good corporate citizens.

Section 01

GrowthStrategies

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 high acclaim and conﬁdence from our customers.
6. We shall strive to disclose corporate information to shareholders and investors throughInvestor Relations (IR) and other activities on a timely and equitable basis.

Section 02

Corporate
Governance

7. We shall strive to protect corporate assets as well as information, while never using either
for improprieties or any unjustiﬁable purpose other than normal business operations.
Section 03

Financial
Information

03

TAKUMA 2021 ANNUAL REPORT

04

Trend in Principal Management Indicators

Financial Highlights

1

Trend in principal management indicators and other ﬁnancial data

（Millions of yen） （Millions of yen） （Millions of yen） （Millions of yen） （Millions of yen） （Millions of yen）

（Thousands of
U.S. dollars）

End of ﬁscal year

March 2016

March 2017

March 2018

March 2019

March 2020

March 2021

March 2021

Value of orders received¥ 99,919¥ 191,026¥ 177,116¥ 179,829¥ 148,830¥ 188,563$ 1,703,224

Order backlog¥ 139,425¥ 214,142¥ 273,060¥ 330,939¥ 345,315¥ 387,152$ 3,497,000

100,000

0

112 th'15

Fiscal year$

94,601

Ordinary proﬁt

¥

9,646

¥ 11,606¥ 10,670¥ 12,334¥ 10,301¥

11,029$99,618Proﬁt attributable toowners of parent

¥

7,817

¥

¥

¥

¥

¥

7,529

$

68,009Comprehensive income

¥

7,149

¥

9,937

Capital investment

¥

1,089

¥

Depreciation

¥

840

¥

8,551

7,847

8,854

7,445

3

Overseas Environment and Energy Business
Package Boiler Business

15,000

7,325

¥

5,881

¥

8,345

$

75,376

10,000

342

¥

505

¥

638

¥

1,564

¥

2,420

$

21,861

5,000

850

¥

789

¥

797

¥

917

¥

1,036

$

9,358

0

10,9749,189

112 th'15¥ 67,727¥ 76,726

Total assets¥ 132,614¥ 140,201

Net assets per share(JPY or USD)

¥ 708.18

Net income per share(JPY or USD)¥

Cash dividends(JPY or USD)

¥

94.55
11.00

1,047

$

9,457

¥ 83,088¥ 85,040¥

90,555$

817,950¥ 151,489¥ 155,989¥ 163,498¥ 177,742$ 1,605,471¥ 815.77¥ 924.25¥ 1,000.34¥ 1,043.15¥ 1,109.87

$

10.03

¥ 103.43¥¥ 107.10

¥

¥

92.73

$

0.84

¥

13.00

¥

¥

928

94.93
16.00

¥

¥

960

22.00

¥

¥

90.36
31.00

¥

36.00

$

1

―

―

―

―

―

―

―

Capital adequacy ratio(%)

44.1

48.1

50.4

53.0

51.8

50.7

50.7

Return on equity(%)

14.1

13.6

10.9

11.1

8.9

8.6

8.6

Price-to-earnings ratio

10.7

10.5

12.3

12.3

13.3

25.8

25.8

¥

6,728

¥

9,590

¥

5,141

¥ 10,817¥ (11,733)¥ (1,680)$(15,183)

Cash ﬂows frominvesting activities

¥

(445)

¥

143

¥

(328)

¥ (1,382)

¥

(202)

¥ (2,053)$(18,550)

Cash ﬂows fromﬁnancing activities¥ (2,900)¥ (1,787)¥ (1,670)¥ (9,120)¥ (4,350)

¥

1,903

$

17,193End-of-year balance of
cash and cash equivalents¥ 48,335¥ 57,132¥ 60,283¥ 61,027¥ 44,753¥

42,957$

388,023

Number of employees

3,366

3,447

3,609

3,619

3,816

200,000

3,925

05

12,405100,000

Fiscal yearYear

3

115 th'18

116 th
'19

117th
'20

115 th'18

116 th'19

20,000904

Overseas Environment and Energy Businessin millionsof yen15,000

5,000

117th
'20

7,500

0

2,500

0

Fiscal year
Year

4

966

Year

115 th'18

116 th
'19

117th
'20

in millionsof yen500

163

in millionsof yenin millionsof yen2,000

12,000

1,000

6,000

0

115 th'18（202）

116 th
'19

（141）

0

117th
'20

-500

Equipment and Systems Business641

0

Net sales
Operating income
Value of orders received

11,475Net sales
Operating income
Value of orders received

in millionsof yen2

in millionsof yenPackage Boiler Business

Fiscal year

Note: 1. U.S. dollar amounts are shown solely for the convenience of readers and are translated at the rate of ¥110.71 to U.S.$1.00, the exchange rate prevailing at March 31, 2021.
2. Ordinary income is a measure of accounting proﬁt that equals operating income plus other income minus other expenses, except for extraordinary items under JapaneseGAAP.

114 th'17

10,61910,0003,925

113 th'16

Net sales
Operating income
Value of orders received

in millionsof yen0Cash ﬂows fromoperating activities

11.5%

0.8%

10,474

Domestic Environment and Energy Business

0.33

Diluted net income pershare(JPY or USD)

9,600

Trend by Segment

93,724¥ 58,809

¥

972

Year

16,955

Net assets

1,154

¥

10,0305.6%

Equipment and Systems Business

11,604

82.1%
Fiscal year743

Net sales composition ratios (FY2020)
Domestic Environment and Energy Business

20,000¥¥4

Operating income(Millions of yen)

¥ 10,177

R&D expenditures

117th
'20

883

10,4740

Fiscal yearYear

Net sales
Operating income
Value of orders received
877

361

384

115 th'18

116 th'19

10,166¥9,600

116 th
'19

1,189

¥

8,271

¥ 11,604

115 th'18$ 1,325,326

1,351¥ 10,030

114 th'17

6,790¥ 10,974

113 th
'16

1,143

9,189

112 th
'15

Year

7,840

¥

0

Fiscal year

799

Operating income

117th
'20

8,567

¥ 146,727

116 th'19

3,057¥ 134,454

115 th'18

8,836¥ 121,951

114 th'17

113 th'16

160,591¥ 118,199

146,727

50,00050,00017,524¥ 116,309

134,454

100,000

120,771¥ 113,088

200,000
150,000

99,919Year

Net sales

Net sales

121,951
113,088 116,309 118,199

16,932

117

123,154

116

148,830

150,000

117th

th

188,563

177,116 179,829

17925

115

th

108,124

114

th

191,026

17869

113

th

200,000

153,628

112

th

2

(Millions of yen)

17,476

Fiscal yearth

Value of orders received(Millions of yen)

117th
'20

in millionsof yen

1,000

500

0

TAKUMA 2021 ANNUAL REPORT

06

The Takuma Group Network (as of June 25, 2021)

Company Outline

See Takuma's website for details.

Takuma's business oﬃces❶Head Oﬃce (Amagasaki, Hyogo)

Company Outline
Name

Head oﬃce location❷Osaka Oﬃce (Osaka)❾❸Tokyo Branch (Minato-ku, Tokyo)

TAKUMA CO., LTD.

❹❸❹

❹Hokkaido Branch (Sapporo, Hokkaido)❺Tohoku Branch (Sendai, Miyagi)

2-2-33 Kinrakuji-cho, Amagasaki, Hyogo 660-0806, Japan❻Chubu Branch (Nagoya, Aichi)

TEL +81-6-6483-2609 / FAX +81-6-6483-2751 (operator)❼Kyushu Branch (Fukuoka)❽Okinawa Branch (Ginowan, Okinawa)

Representative Director

Hiroaki Nanjo, President and CEO

Established

June 10, 1938

CapitalJPY 13,367,457,968 (as of March 31, 2021)⓮❾Harima Factory (Takasago, Hyogo)❿Taipei Branch (Taipei, Taiwan)Group companies in Japan

Main businesses❶Nippon Thermoener Co., Ltd.

The design, construction and superintendence of a wide variety of boilers, plant machinery,pollution prevention plants, environmental equipment plants, and heating andcooling equipment and feed-water / drainage sanitation equipment and facilities
The design, construction and superintendence of civil, architecture and other works

Number of employees(non-consolidated)

894 (as of March 31, 2021)

Number of employees(consolidated)

3,925 (as of March 31, 2021)❺❽❷Takuma Technos Co., Ltd.
❸Hokkaido Sanitary Maintenance Co., Ltd.

⓴

❹Takuma Technos Hokkaido Co., Ltd.
❺Sunplant Co., Ltd.
❻Takuma Engineering Co., Ltd.
❼Takuma System Control Co., Ltd.

❻❼⓲

❽Dan-Takuma Technologies Inc.
❾Kyoritsu Setsubi Co., Ltd.
❿Kankyo Sol-Tech Co., Ltd.
⓫Takuma Plant Co., Ltd.
⓬Nagaizumi High Trust Co., Ltd.

Permits and registrations⓳⓭Fujisawa High Trust Co., Ltd.
⓮Iwate-Kenpoku Clean Co., Ltd.

Construction license (Minister of Land, Infrastructure, Transport and Tourism license, Special 2-6129) / Construction
consultant registration (Minister of Land, Infrastructure, Transport and Tourism registration, Construction 01-10202) /First-class architect oﬃce registration (01A02903) / ISO 9001 quality management system certiﬁcation⓰Anan High Trust Co., Ltd.
⓱Takuma Energy Co., Ltd.
⓲Kurume High Trust Co., Ltd.

⓯❾❿

⓯Hitachinaka-Tokai High Trust Co., Ltd.

Head Oﬃce, branch oﬃces, and other business oﬃces

❷

❷❸ ❺

❶❻❼⓫⓱

❽ ❶

⓳Hokutan High Trust Co., Ltd.
⓴Suwako High Trust Co., Ltd.

Harima Factory
ISO 9001 quality management system certiﬁcation / ISO 14001
environmental management systems certiﬁcation / Manufacture ofthermal equipment for power generation (Ministry of Economy, Tradeand Industry) / Permission to manufacture boilers and pressure
vessels, permission to manufacture cranes (Ministry of Health,Labour and Welfare) / Manufacture of speciﬁc high-pressure gas
facilities (Ministry of Economy, Trade and Industry)

Imabari High Trust Co., Ltd.

⓬

⓰

⓭

Energy Mate Co., Ltd.

ISO 9001

JQA-1952
ISO 9001 certiﬁcation
Head Oﬃce, Osaka Oﬃce,
Tokyo Branch, Chubu
Branch, Kyushu Branch,
Hokkaido Branch andHarima Factory

Kashihara High Trust Co., Ltd.
Techno Links Inc.
ISO 14001

JQA-EM0313
ISO 14001
certiﬁcation
Harima Factory

Tochigi High Trust Co., Ltd.
Ecos Yonezawa Co., Ltd.
❿❶Group companies overseas❶Taiden Environtech Co., Ltd.
❷Siam Takuma Co., Ltd.
❷07

TAKUMA 2021 ANNUAL REPORT

08

Message from Top Management

We continue to help solve
social problems and contributeto the sustained developmentof the world by creating valuable
products and services.

We at Takuma oﬀer our heartfelt condolences for all
those who have lost their lives as a result of
COVID-19, and we hope that all those suﬀering fromthe disease will recover quickly and that the pandemic
will be brought under control as soon as possible.

Management Principles

Inventor Tsunekichi Takuma founded Takuma in
1938 with the philosophy of Serve society throughboiler manufacturing. Since that time the Takuma
Group has inherited that philosophy and used it toestablish businesses involving the full array of boilers
while taking advantage of technologies developed
through boilers to enter the environmental sanitationﬁeld with facilities such as waste treatment plants andwater treatment plants, broadening its businesses
with a focus on the ﬁelds of energy use andenvironmental protection, and contributing to society's
development and the resolution of social problems.
Our Management Principles lie in this founding spirit,and a dedication to contributing to the sustained
development of society over the long term throughbusiness activities remains the starting point of the
Takuma Group as well as a core expression of its
unchanging values.

Takuma Group Strengths

Along with the technologies and expertise that the
Takuma Group has accumulated through the repeated
improvement of products and services since its
founding, the relationships of sincerity and trust that
the Group has developed with longstanding customers
by providing after-sales service and solutions havebeen passed down unbroken as the tangible andintangible assets that embody its greatest strengths
and the source of its ability to compete successfully.

09

Reﬂections on the 12th
Medium-Term Management Plan
Under the 12th Medium-Term Management Plan
(FY2018 to FY2020), which represents the ﬁnal stage
in the Group's eﬀort to achieve the medium- andlong-term vision for FY2020 that it began in FY2012
of being an indispensable presence in society as aleading company in the ﬁeld of renewable energy
utilization and environmental protection and ofachieving ordinary proﬁt of JPY 10.0 billion in
FY2020, we have pursued the theme of increasing
our corporate capabilities in order to achieve ourcorporate vision and subsequently realize steady
growth. In addition to working to strengthen andexpand our revenue foundation, for example byproposing solutions based on customer needs in our
after-sales service business and launching an energy
plant O&M* business for private-sector companies, we
safeguarded our market position by continuing tosteadily turn robust demand into orders received in our
EPC business*. As a result of these initiatives, weachieved the targets set forth in the ﬁnancial plan (forconsolidated ordinary proﬁt).

Vision 2030 Long-Term Vision

Global issues that merit concern include thegrowing seriousness of the problem of climate change;
the worsening of the sanitation environment due torapid population growth and urbanization, particularlyin emerging nations; and increasing energy demand.
At the same time, domestic challenges like fallinginternal demand caused by the shrinking and aging ofJapan's population, shortages of human resources
and future leaders, tight ﬁnancial conditions aﬀecting

TAKUMA 2021 ANNUAL REPORT

10

Message from Top Management

national and local government, and aging
infrastructure are triggering major concerns about howa sustainable society can be realized going forward.
Based on these social conditions and issues, weformulated Vision 2030 as a long-term vision thatwould serve as new guidelines for the Group's
medium- and long-term management.
In keeping with this vision, the Takuma Group will
implement Environment, Social, and Governance(ESG) management, an approach that consists ofaddressing key ESG-related issues in an eﬀort toachieve sustained growth by resolving issues faced bycustomers and society through business activities. In
pursuing business activities built on a core of ESG
management, we will strive to become a great partner
for our customers by leveraging the technologies andexpertise related to energy utilization andenvironmental protection that are the Group's
strengths, along with the relationships of trust we havedeveloped with customers over the long term. Throughthe useful technologies and services created throughinnovation by the Group, which carries on the spirit ofa tenacious inventor, we will resolve challenges facedby customers and society, with a focus on the ﬁelds ofrenewable energy utilization and environmental
protection. We at the Group will work to achieve
ordinary proﬁt of JPY 20.0 billion in FY2030 byaddressing key ESG-related issues through ourbusiness activities and realizing sustained growthalongside our customers and society.

13th Medium-Term
Management Plan

The Takuma Group launched its 13th Medium-Term
Management Plan (FY2021 to FY2023) in April 2021
as the ﬁrst step towards realizing Vision 2030, ourlong-term vision. The plan's theme is laying the11

foundation for further growth based on the
management foundation and business foundation that
the Group has built to date.
The basic policy set forth in the 13th Medium-Term
Management Plan is strengthening conventional
businesses by reinforcing the Group's managementfoundation and at the same time accelerating our
response to future environmental changes. We will
strive to realize sustainable growth alongsidecustomers and society by implementing ESG
management through these business activities.
1) Implementing ESG Management
In order to realize sustained growth alongside ourcustomers and society by implementing ESG
management as set forth in Vision 2030, our long-term
vision, the Group approached the task of formulating
the 13th Medium-Term Management Plan byorganizing various ESG issues from the dual
standpoints of their importance for stakeholders andsociety on the one hand, and their importance for theGroup on the other. This process led to theidentiﬁcation of seven key issues (Materiality) thatdeserve to be given priority by the Group.
Helping combat climate change
Environment

Conserving resources and protecting
the environment
Strengthening relationships of trust withcustomers and communities

Socialneutrality by 2050, the Group will work to strengthen
its management foundation through active allocationand investment of resources in human resources,
digital technologies, and other areas of our operations
while accelerating eﬀorts to strengthen conventional
businesses and accommodate future environmental
changes.
3) Financial Targets
In order to achieve the goal of posting ordinary proﬁtof JPY 20.0 billion in FY2030 as set forth in Vision
2030, our long-term vision, the 13th Medium-Term
Management Plan sets the achievement of steady
growth and a target of cumulative consolidated
ordinary proﬁt of JPY 36.0 billion over the course of
the plan (FY2021 to FY2023) as the ﬁrst step in thatprocess. We will work wholeheartedly to achieve
those goals.

means as high-eﬃciency power generation using waste
and biomass since before the phrase renewableenergy entered into common usage. We believe that
initiatives to achieve the Sustainable Development
Goals (SDGs) put forth by the United Nations and the
COP21 Paris Agreement align extremely well with theGroup's businesses.
July 2021
Takuma Co., Ltd.
President and CEO
Hiroaki Nanjo

Takuma has been a signatory to the United Nations
Global Compact* since 2006, and we support its 10
fundamental principles in the four areas of humanrights, labor, environment, and anti-corruption. We will
work to develop our business while understanding andrespecting these globally shared principles. The
Takuma Group has been helping resolve social issues
with technologies for reducing emissions ofgreenhouse gases like carbon dioxide through such

Pursuing partnerships and innovation
Promoting activities of human resources
Ensuring safety and health

Governance

Strengthening corporate governance2) Strengthening the Management Foundation
In order to anticipate change and realize additional
growth as environmental change gathers pace, forexample in the rapid development of digitaltechnologies and the goal of achieving carbon*O&M: Operation & Maintenance*EPC business: A business in which Takuma oﬀers a turnkey service extending from plant design to procurement and construction(Engineering, Procurement, and Construction)*United Nations Global Compact: 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.

TAKUMA 2021 ANNUAL REPORT

12

Section 01

Growth Strategies

Vision 2030 Long-Term Vision
Vision for FY2030

The Takuma Group's
management strategy
The Takuma Group formulated Vision 2030
as its long-term vision for 2030.
To realize this vision, we are pursuing the necessary
investments and business strategies.

Company Motto
Management Principles
Vision 2030 Long-Term Vision
Implementing ESG management
13th Medium-Term Management Plan
(FY2021 to FY2023)
P21
Business Strategies

Based on these external environmental factors, the Takuma Group will implement Environment, Social, and Governance(ESG) management, an approach that consists of addressing key ESG-related issues in an eﬀort to achieve sustained
growth by resolving issues faced by customers and society through business activities.
In pursuing business activities built on a core of ESG management, we will strive to become a great partner for ourcustomers by leveraging the technologies and expertise related to energy utilization and environmental protection that are
the Group's strengths, along with the relationships of trust we have developed with customers over the long term throughafter-sales service and other interactions. Through the useful technologies and services created through innovation by theGroup, which carries on the spirit of a tenacious inventor, we will resolve challenges faced by customers and society, with afocus on the ﬁelds of renewable energy utilization and environmental protection.
Through the implementation of ESG management in this manner we will seek to achieve sustained growth alongside ourcustomers and society and realize a sustainable society while securing ordinary proﬁt of JPY 20.0 billion as a yardstick of
proﬁtability.

Aim to maintain our role of being an indispensable presence in society
as a leading company in the ﬁeld of renewable energy utilizationand environmental protection.

P25

Sustainable growth alongside our customers
and society through implementation of ESG management

FY2030

Provision of technologies and services

Vision 2030
Aim 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
by realizing sustained growth alongside our customers and society through implementation of ESG management.

Innovation

Ordinary proﬁt

20.0

Resolution ofchallenges

Long-Term Vision

JPYbillionCustomers

FY2020
Takuma Group

SocietyOrdinary proﬁt

11.0

JPY
billionCreative R&D

Sharing ofneeds and issues

Sustainable growth by implementing ESG management
Financial target

FY2030 ordinary proﬁt:

JPY 20.0 billion

External environment outlook
Global-scale concerns include a worsening of the problem of climate change; deterioration in the sanitation environment
due to rapid population growth and urbanization, particularly in emerging nations; and growth in energy demand. Concerns
in Japan include falling internal demand caused by the shrinking and aging of Japan's population, shortages of humanresources and future leaders, tight ﬁnancial conditions, and aging infrastructure.

GlobalDomestic(Japan)13

Rising demand for resources, food, water, energy, and waste treatment as the planet's population grows
Increasingly serious problem of climate change
Progress of the Fourth Industrial Revolution and the digital transformation (DX)
Shortages of human resources and future leaders caused by the shrinking and aging of Japan's
population; depopulation around large cities and in rural areas
Tight ﬁnancial conditions caused by declining tax revenues in the face of the shrinking
population and the need to deal with natural disasters and infectious disease
Contraction and streamlining of public services due to tight ﬁnancial conditions; increasing
reliance on private-sector companies
Demolition, consolidation, eﬀective use, and replacement of aging and underutilized
infrastructure, houses, etc.

Realizing solutions to challenges faced by customers and society,with a focus on renewable energy utilization and environmental protection

Provision of technologies and services
Expanding clean energy
Improving energy eﬃciency
Capturing and eﬀectively utilizing CO 2
Reducing power and manpower
requirements of plant facilities while
making them more resilient

Reducing greenhouse gas emissions
Realizing stable treatment of waste
Providing decarbonization
technologies

Saving energy
Utilizing unused resources
Realizing local production andconsumption of energy

Takuma Group business activities
EPC business

Recurring revenue model businesses

Overseas businesses

Engineering, Procurement,
and Construction (EPC) of a variety of plants

Maintenance, operation management,
O&M, energy services, etc.

EPC and after-sales service for Energy
from Waste plants and biomass power plants

Maintenance and expansion of position
as a leading company

Additional expansion
as a core driver of growth

Expansion with a focus on
emerging nations in Asiaand its development into a core businessfor the Group

Package boiler business

Equipment and systems businessNew businesses

Expanding business domain
as a manufacturer specializingin heating systems

Aiming for steady growthby strengthening corporate strength

Creating new business
opportunities centeredon the renewable energy
and environmental ﬁelds

TAKUMA 2021 ANNUAL REPORT

14

Section 01

Growth Strategies

Implementing ESG Management: Key Issues (Materiality) for the Takuma Group

Implementing ESG Management

Key Issues (Materiality) for the Takuma GroupWe are implementing ESG management, which seeks to satisfy all stakeholders and realize sustained growth for the Groupby strengthening initiatives that address ESG issues through our business activities.
In this approach, we have identiﬁed seven key issues (Materiality) related to ESG that deserve to be given priority whenbeing addressed through our business activities.
To realize a sustainable society, we will create positive outcomes by addressing these issues through our business activities.

The Group has identiﬁed seven key issues (Materiality) and 19 issues that deserve to be given priority when being
addressed through our business activities.
We are pursuing initiatives to strengthen our business activities and management foundation for each of these materialities
and issues.

Process for identifying key issues

Business activities
Domestic Environment and Energy Business

Package Boiler Business

Overseas Environment and Energy Business

Equipment and Systems Business

The following process was used to identify key issues.

Analyzing the status quo and organizing issues

Step1

Key Issues (Materiality)

We analyzed a variety of management issues that aﬀect the company from the dual
perspectives of the external and internal environment.
We compiled a list of 64 issues by analyzing the external environment from the standpointof ISO 26000, GRI, SDGs, FTSE, DJSI indicators and requirements, and the internal
environment from the standpoint of indicators provided by the Group's Management
Principles, strategies, current initiatives, and other yardsticks.

Evaluating their importance and verifying suitability

Step2
Helping combat
climate change

Conserving resources
and protecting
the environment

Strengthening relationshipsof trust with customers
and communities

Pursuing
partnerships and innovation

We created a matrix organizing the 64 issues identiﬁed in Step 1 by analyzing andevaluating their importance for stakeholders and society on the vertical axis and theirimportance for the Group on the horizontal axis. We then veriﬁed the suitability of the list
through a process that included steps such as an internal exchange of views to narrow
down the list of issues to 19 that deserved to be addressed by the Group.

Identifying key issues

Step3
Promoting activities ofhuman resources

Ensuring
safety and healthThrough discussions among members of the company's executive leadership, the following
list of key issues to be addressed by the Group was ﬁnalized based on the 19 issues.

Strengthening
corporate governanceOutcome

The environment
Creating clean energy
Reducing greenhouse gas emissions
Reducing environmental impacts

Customers and regional society
Helping create sustainable communities
Protecting the living environment
Maintaining industrial infrastructure

Shareholders, business partners
and employees
Increasing corporate value
Building stable relationships of trust
Realizing a workplace environment
characterized by high motivation

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

15

Importance for stakeholders and society

Extremely important

Key issues (Materiality) as identiﬁed
Helping combat climate change
Conserving resources and protecting the environment
Strengthening relationships of trust with customers and communities
Pursuing partnerships and innovation
Promoting activities of human resources
Ensuring safety and healthStrengthening corporate governanceImportant

Importance for the Takuma Group

Extremely important

TAKUMA 2021 ANNUAL REPORT

16

Section 01

Growth Strategies

Key Issues (Materiality) for the Takuma Group
Materiality and KPI (Key Performance Indicator)
Materiality

Helping combat climate change

Issue

1. Promoting renewable energy(non-fossil energy)
2. Improving energy eﬃciency

E

Environmental
initiatives

Conserving resources
and protecting the environment

1. Conserving resources andreducing environmental impacts
2. Making eﬀective use ofunutilized resources

1. Pursuing customer satisfaction

Strengthening relationshipsof trust with customers
and communities

S

Pursuing partnerships
and innovation

2. Ensuring the stable, continuous
operation of plants andequipment
3. Recycling local resources
and creating new value forcommunities

1. Utilizing digital technologies(AI, IoT, robots, etc.)
2. Developing open partnerships
3. Pursuing innovation

Reason for selection

We will help alleviate the global
problem of climate change using
the technology and expertise wehave accumulated over more than
80 years.

We will contribute to the eﬀective
use of unutilized resources andto the conservation of resources
with Takuma technologies while
helping make it possible to reduce
environmental impacts and realize
a Sound Material-Cycle Society.

We will help resolve issues facing
customers and communities andstrengthen relationships of trust byproviding safe,
high-quality products and services
and undertaking initiatives that
address local resource recycling.

We will facilitate the supply of highvalue-added products and services
by introducing digital technologies
and expanding partnerships withoutside companies.

Socialinitiatives

Promoting activities ofhuman resources

1. Securing, and training humanresources
2. Promoting diversity
3. Improving employee satisfaction

1. Ensuring occupational safety
and health

Ensuring safety and health

2. Managing employee health
3. Creating a comfortable working
environment

G

Governanceinitiatives

17

Strengthening
corporate governance

1. Strengthening corporate
governance
2. Strengthening risk management
3. Ensuring compliance

Putting in place an environment
in which all employees canmake the most of their abilities isessential in order to facilitate thecompany s growth and strengthen
its competitiveness.

Safeguarding the physical andmental health of workers andbuilding a comfortable working
environment helps create a stablefoundation for Takuma s value
creation activities.

Strengthening corporate
governance both supports
companies stable growth and helps
avoid and reduce losses and otheradverse events by making possible
the organizational management of
risk.

Risks and opportunities【Risks】● Accommodation of policies and regulations intended to realize a decarbonizedsociety● Changes in customer requirements, for example additional improvements inenergy eﬃciency● Reduction in support from policies, for example as a result of the review of the
FIT program【Opportunities】● Growth in the market for renewable energy and environmental businesses due
to strengthening of environmental regulations● Growth in energy usage demand for biomass (including waste, sewage sludge,
and other resources) in order to alleviate climate change

Speciﬁc initiatives● Supply of biomass power plants● Supply of fuel conversion (biomass, RPF, etc.) boilers● Supply of renewable energy and CO2-free power● Reduction in CO2 emissions (energy consumption) by Takuma● Improvement in energy eﬃciency at facilities Takuma operates

on a contractual basis● Proposal of energy eﬃciency improvements for customer

facilities and equipment【Risks】● Reduction in domestic waste volume due to the shrinking of the population● Supply of high-eﬃciency, low-environmental-impact Energy【Opportunities】● Growth of appropriate treatment of waste and growth in demand for use ofenergy from waste in emerging nations● Growth in expectations towards resource-saving and low-environmental-impact
systems and the eﬀective use of unutilized resources● Supply of advanced treatment sand ﬁlter systems【Risks】● Loss of trust in the event Takuma fails to provide safe, high-quality products
and services● Shrinking budgets of local governments【Opportunities】● Growth in demand for biomass power generation as a type of energy that canbe produced and consumed locally● Growth in expectations toward the creation of new value for communities, forexample through disaster prevention facilities and energy centers● Additional growth in the use of private-sector entities to provide government
services【Risks】● Opportunity loss due to lag in accommodating new technologies such as
Artiﬁcial Intelligence (AI) and the Internet of Things (IoT)【Opportunities】● Growth in demand for eﬃciency-boosting and labor-saving technologies inplant operation (remote monitoring and operation, data analysis, maximizationof amount of power sold, etc.)● Creation of revolutionary technologies and services as well as new business
opportunities through the expansion of partnerships【Risks】● Reduction in competitiveness due to a shortage of employees with specializedskills● Discontinuity in the passing down of skills as highly experienced employees
reach retirement age and leave the workforce【Opportunities】● Strengthening of competitiveness through human resources development andmanagement that promotes diversity【Risks】● Reduction in productivity and social trust due to problems involving the safety
and health of employees and aﬃliates (loss of order opportunities due to theoccurrence of serious occupational accidents, etc.)【Opportunities】● Improvement in productivity and strengthening of competitiveness throughimprovements in the workplace labor environment【Risks】● Reduction in business sustainability due to a lack of appropriate
decision-making● Cessation of business due to violations of competition or environmental law or
regulations on conduct such as corruption, and associated reduction in social
trust【Opportunities】● Improvement in the ability to create value along with avoidance and reductionof risk as a result of strengthened corporate governance

KPI

from Waste plants● Supply of sewage sludge-fueled power plants

Magnitude of potential
reduction in CO2 emissions
due to newly delivered power
plants*● FY2023: 800,000 tons
per year● FY2030: 2.5 million tons
per year*Biomass power plants andEnergy from Waste plants
delivered from FY2021 toFY2030● Establishment of combustion technology for unutilizedbiomass● Development of technology for reusing incineration ash● Development of technology for recovering and using CO2● Supply of products and services that satisfy customers● Improvements in the quality of Takuma s operation and O&M

businesses● Increasing sophistication of maintenance service● Initiatives addressing the Regional Circular and Ecological

Sphere (Regional CES), regional use, and decentralized power
supplies● Initiatives such as PPP that address additional use ofprivate-sector entities● Increases in the added value of facilities and plants● Strengthening of competitiveness in EPC operations, operation

management, and maintenance service● Pursuit of open innovation● Pursuit of new businesses that contribute to the enhancementof existing businesses and services● Development of technologies and products that are sought bysociety and customers● Hiring of new graduates and mid-career employees● Development of optimal human resources programs in

Number of main career trackand management positions
ﬁlled by women:
At least 35 (cumulative total
for FY2021 to FY2025)
Utilization of parenting
support programs:
At least 25% (average for
FY2021 to FY2025)
Number of fatal accidents: 0

response to social changes● Development of an eﬀective training system● Active hiring of diverse human resources and development ofcareer support programs● Reduction in the occurrence of occupational accidents● Prevention of health problems and rectiﬁcation of overwork● Implementation of workstyle reforms● Sustained improvement through practices such as evaluationsof the eﬀectiveness of the Board of Directors● Continued conduct of appropriate internal audits● Additional improvement in the eﬀectiveness of risk

management activities● Even more thorough project risk management

Number of serious complianceviolations: 0● Implementation and ongoing reassessment of BusinessContinuity Planning (BCP)● Ongoing implementation of compliance education

TAKUMA 2021 ANNUAL REPORT

18

Section 01

Growth Strategies

Medium-Term Management Plan

Medium-Term Management Plan

Summary of the 12th Medium-Term Management Plan (FY2018 to FY2020)

Corporate Vision (FY2012 to FY2020) and Medium-Term Management Plans to date
The Takuma Group worked to build business structures capable of consistently earning ordinary proﬁt of at least JPY 10.0
billion even as the business environment underwent major changes under the 10th to 12th Medium-Term Management
Plans in an eﬀort to realize its Corporate Vision of aiming to maintain our role of being an indispensable presence insociety as a leading company in the ﬁeld of renewable energy utilization and environmental protection and of achieving an
ordinary proﬁt of JPY 10.0 billion in FY2020.

As the ﬁnal stage of our Corporate Vision, we implemented business strategies based on a set of basic policies andpriority measures in an eﬀort to achieve cumulative ordinary proﬁt of JPY 33.0 billion over three years by building a resilientbusiness and management foundation that enables Takuma to respond to future changes in the business environment. In
terms of ordinary proﬁt, we were able to achieve the targets set forth in the Corporate Vision and Medium-Term Management
Plans to earn at least JPY 10.0 billion starting in FY2016, JPY 11.0 billion in FY2020, and a cumulative total of JPY 33.6
billion under the 12th Medium-Term Management Plan from FY2018 to FY2020.

Positioning of the 12th Medium-Term Management Plan
Final stage of the Corporate Vision that was launched in FY2012

Medium-and
Long-Term Vision

Medium- and Long-Term Vision (Corporate Vision)

Long-Term Vision

FY2012 to FY2020

FY2021 to FY2030

Through FY2011

Strive to achieve cumulative consolidated-basis ordinary proﬁt of JPY 33.0 billion over three years by building a resilient business andmanagement foundation that enables Takuma to respond to future changes in the business environment.

Results and issues
9th Medium-Term
Management Plan

10th Medium-Term
Management Plan

11th Medium-Term
Management Plan

12th Medium-Term
Management Plan

13th Medium-Term
Management Plan

(FY2009 to FY2011)(FY2012 to FY2014)(FY2015 to FY2017)(FY2018 to FY2020)(FY2021 to FY2023)

Proﬁtability throughselection and concentrationof resources

Reinforcement ofbusiness foundation forstability and proﬁtability

Steady expansion interms of both quantityand quality

Strengthening ofcorporate capability tofacilitate steady growth

Laying the foundations
for additional growth

Cumulative ordinary proﬁt results

Cumulative ordinary proﬁt results

Cumulative ordinary proﬁt results

Cumulative ordinary proﬁt results

JPY

1

2

Ordinary profit(right axis)

120
100

146.7

116.3
113.1

101.0

96.4

80

96.3
9.4

89.1
7.3

11.6

103.9
9.1

122.0
118.2

(Billion JPY)
16
14

134.5

12.3

10.7

8
7.2
6

4.4

4
2

19

2010

2011

2012

2013

2014

2015

2016

2017

2018

Initiatives to improve productivity, for example by utilizing
Information and Communications Technologies (ICT), havedelivered results but remain ongoing.

4

Promoting activities of human resources

The workforce situation remains tight despite signiﬁcant expansion
in the number of hires as we work to secure the necessary humanresources.

5

Continuing to pursue compliance management

Awareness of the importance of compliance has permeated theGroup thanks to ongoing educational activities. Developing evenmore eﬀective measures remains an issue.

Initiatives to maintain our position in sludge incineration and expand
the overseas business are ongoing.
Progress in eﬀorts to reﬁne core technologies and development ofproprietary technologies has generally been smooth.

１０

20
0

Increasing productivity,for example by reforming business processes

11.0

60
40

3

12
10.3

9.6

Achieving sustained growth

In the EPC business, we maintained our market position thanks tosteady or increasing orders for domestic waste treatment andenergy facilities.

at least JPY 10.0 billion even as the business environment undergoes major changes

Net sales(left axis)

Progress made in initiatives designed to reduce Life Cycle Costs(LCC), for example by using POCSYS ®.

Firm orders secured for package boilers as well as equipment andsystems helped to contribute to stable consolidated-basis proﬁts.

Building structures capable of consistently earning ordinary proﬁt of

140

Orders increased as we proposed solutions based on customers
needs through recurring revenue model businesses (equipment
improvements and service life extensions).

Received multiple orders in our O&M business, including from theprivate-sector for the ﬁrst time, in our Energy Plant Business; began
operations and broadened the range of services we oﬀer.

13.7 billion JPY 25.7 billion JPY 31.9 billion JPY 33.6 billion(Billion JPY)
160

Strengthening and expanding our revenue foundation

20192020 (FY)

10th Medium-Term Management Plan

11th Medium-Term Management Plan

12th Medium-Term Management Plan

Reinforcement of business foundation forstability and proﬁtability

Steady expansion in terms of bothquantity and quality

Strengthening of corporate capability tofacilitate steady growth0

Financial targets and results under previous medium- and long-term vision andthe 12th Medium-Term Management Plan
Previous medium- and long-term vision:
FY2020 ordinary profit …………………………… Target JPY 10.0 billion → Result JPY
12th Medium-Term Management Plan:
Cumulative three-year ordinary profit ………… Target JPY 33.0 billion → Result JPY

11.0 billion
33.6 billion

TAKUMA 2021 ANNUAL REPORT

20

Section 01

Growth Strategies

Medium-Term Management Plan

13th Medium-Term Management Plan (FY2021 to FY2023)
We will develop measures to fuel additional growth as a plan for taking the ﬁrst steps towards realizing the ﬁnancial targetof ordinary proﬁt of JPY 20.0 billion as set forth in Vision 2030. Speciﬁcally, we will work to earn cumulative ordinary proﬁtof JPY 36.0 billion over three years while strengthening conventional businesses and accommodating future environmental
changes in every area of our business activities by strengthening six core areas of our management, including investments
in human resources and digital technology.

Positioning
Lay the foundations for additional growth and take the ﬁrst steps under the 13th Medium-Term Management Planas we prepare to realize the Vision 2030 target of ordinary proﬁt of JPY 20.0 billion.

On implementing
the 13th Medium-Term
Management Plan
Hideki Takeguchi

Tsuyohito Nishiyama

Director & Senior Managing
Executive Oﬃcer
Executive Manager
of Engineering Group

Director & Senior Managing
Executive Oﬃcer
Executive Manager
of Corporate Marketing Group

Financial target

JPY 36.0 billion

Cumulative ordinary proﬁt
from FY2021 to FY2023

Previous vision
12th Medium-Term Management Plan

Vision 2030
FY2030First steps towards
realizing Vision 2030
FY2020
The Group s ﬁnancial foundations
were strengthened prior to the 12th
Medium-Term Management Plan.
Ordinary proﬁt

JPY

Plan positioning and business13th Medium-Term Management Plan

11.0 billion

Ordinary proﬁt

Laying the foundations
for additional growthJPY

20.0 billion

Three-year
cumulative ordinary proﬁt

JPY

36.0 billion

13th Medium-Term Management Plan ﬁnancial targets(cumulative 3-year targets)

Ordinary proﬁt: JPY 36.0 billion
Orders received: JPY 450.0 billion (reference)

Basic policyby actively pursuing ESG.
The Group has worked throughout its history to resolve social

Based on the results and issues ofissues such as climate change and environmental protection

the 12th Medium-Term Management

through its business activities, for example by supplying municipal

Plan, the 13th Medium-Term Manage-

solid waste treatment plants and biomass power plants, and thisment Plan seeks to lay the foundations

approach aligns with the ESG management approach. The new

for additional growth while securing

Medium-Term Management Plan identiﬁes the Takuma Groupcumulative ordinary proﬁt of JPY 36.0

Materiality that deserve to be addressed on a priority basis throughbillion over its three-year period as theour business activities and establishes Key Performance Indicators

ﬁrst step towards realizing the target of(KPI) in order to clarify these initiatives. We will strive to achieve

ordinary proﬁt of JPY 20.0 billion as set

sustained growth by continuing to address materialities that help

forth in Vision 2030. To achieve theseresolve social issues through business activities that resolve

targets, we will steadily earn and carrycustomers issues and implementing ESG management.

out EPC projects with a focus on ourStrengthening conventional businesses by reinforcing the Group s management foundation

ﬂagship businesses, the Municipal Solid Waste Treatment Plant Busi-

and at the same time accelerating its response to future environmental changes

ness, Energy Plant Business, and Water Treatment Plant Business,

In addition to further developing an approach to ESG manage-

Striving to realize sustainable growth alongside customers and society by implementing ESG management

while expanding after-sales service such as operation management

ment that has already taken root at Takuma in order to achieve thethrough these business activities

and maintenance of facilities and equipment delivered across all oftargets set forth in the 13th Medium-Term Management Plan and,our businesses (recurring revenue model businesses). We will also

on a longer-term basis, in Vision 2030, we will further enhance

work to maintain and expand the Package Boiler Business and theand expand recurring revenue model businesses by treating themEquipment and Systems Business. Additionally, we will pursue initia-

as drivers of the Takuma G roup stives with goals such as expanding the Power Retail Business, study-

growth in order to realize stable opera-

ing new businesses, and growing overseas businesses as the foun-tion of facilities over the next 20 to 30

dation for realizing Vision 2030, and we will strengthen our manage-

years. At the same time, we will work

ment foundation through initiatives including hiring and training theto maintain and expand our position as

human resources who will be necessary in order to pursue thea leading company in the Engineering,Group s business strategies, pursuing a range of partnerships as well

Procurement, and Construction (EPC)

as R&D, embracing digitalization, and updating the Harima Factory.

business.

Implementing ESG management to ensure sustained growth

together to implement the 13th Medi-

Implementing ESG management
Pursuit of business activities that help resolve challenges faced by customers and society❶ Municipal Solid Waste Treatment
Plant Business❷ Water Treatment Plant Business❸ Energy Plant Business❹ Power Retail Business❺ Overseas Businesses❻ New Businesses❼ Package Boiler Business❽ Equipment and Systems
BusinessStrengthening
conventional
businesses

Responding
to environmental
changes

Human resources
R&D
Manufacturing and engineering capabilities

Digital technologies
Capital investment

Conclusion

In this way, the Group will comeStrengthening the management foundation

21

strategy towards implementation

Partnerships
ComplianceWith a focus on evaluating companies from a non-ﬁnancial

um-Term Management Plan and create

standpoint, ESG provides a set of indicators for measuring how

a bright future by growing in a sustained

well a company is working to resolve social issues through its busi-

manner alongside its customers andness activities. We believe that sustained growth can be realizedsociety.

TAKUMA 2021 ANNUAL REPORT

22

Section 01

Growth Strategies

Medium-Term Management Plan

Strengthening the management foundation

Partnerships

We will work to strengthen the following six core areas of our management by allocating and investing management
resources to steadily implement our business strategies.

Human resources
In addition to systematically hiring and training thehuman resources who will be necessary in order tomaintain and expand the Group s business activities andto accommodate the changing times, we will strive tostrengthen the Group s competitiveness and realize
additional growth through initiatives in areas such as
promoting diverse workstyles and fostering employee
health.

Corresponding principal Materiality and issues
Promoting diversity
Managing employee health

Theme 1

Strengthening recruiting activities andreviewing employment systems

Systematically hiring new graduates and mid-career employees
Reviewing programs to make use of older workers and to hire
specialized workers

Theme 2

Reviewing the human resources development system

The Takuma Group is pursuing a partnership-based
initiative to operate municipal solid waste treatment plants,
which play a role as disaster prevention facilities. As theRegional Circular and Ecological Sphere (Regional CES)*
and activities to realize carbon neutrality by 2050 gather
momentum, we will continue to pursue initiatives to create
new value in communities while making use ofpartnerships with outside companies and organizations.

Making eﬀective use of unutilized resources
Recycling local resources and creating new value for communities
Developing open partnerships

Theme

Creating new value through alliances

Pursuing robust partnerships with non-group companies and otherstakeholders in a variety of contexts*An approach that seeks to make the most of regional energy through mutual
support and the supplementation of resources in line with regional
characteristics while facilitating the formation of autonomous, decentralized
communities and making maximum use of regional resources like beautiful
natural landscapes (source: website of the Ministry of the Environment)

R&D, manufacturing, and engineering capabilities
In addition to enhancing our technologies in plant-relatedﬁelds, we will strengthen our business competitivenessthrough further improvements to the safety and quality of
products and services supplied by the Group.

Implementing career development support measures such as job
rotation programs to help train engineers and other personnel,
programs to follow up on the development of young workers, etc.

Theme 3

Corresponding principal Materiality and issues

Corresponding principal Materiality and issues
Pursuing innovation
Pursuing customer satisfaction
Ensuring occupational safety and health

Theme 1

Strengthening R&D

Creating products and services required in this new era by utilizing
open innovation

Pursuing workstyle reforms andenhancing the workplace environment

Theme 2

Examining a diverse range of workstyles that allow workers to dotheir jobs without regard to time or place

Strengthening manufacturing andengineering capabilities

Reﬁning and improving the quality of core technologies, the overallplant, and main equipment

Implementing health-focused management

Increasing intrinsic safety in design and installation, and preventing
occupational accidents

Digital technologies
In addition to providing continuous remote monitoringand operational support for customer plants through our
Solution Lab, we are implementing initiatives to realize
stable, eﬃcient plant management by utilizing big datafrom plants through our POCSYS ® Plant Optimization
Comprehensive Support System. Going forward, we will
strive to realize additional growth for the Group by working
to improve plant added value and strengthen
competitiveness in EPC as well as after-sales service
through the use of digital technologies such as Artiﬁcial
Intelligence (AI) and Information and Communications
Technologies (ICT).

Corresponding principal Materiality and issues
Ensuring the stable, continuous operation of plants and equipment
Using digital technologies

Theme 1

Bringing digital technologies to products and services

Rolling out digital technologies to reduce manpower requirements
and streamline operations at plants, improve maintainability andfunctionality, and realize more stable operations

Theme 2

Capital investment
In implementing our plan for the new Harima Factory, we
will strive to realize a sustainable plant that is eﬀectively
CO 2 emission-free while further increasing productivity andquality.

Corresponding principal Materiality and issues
Improving energy eﬃciency
Pursuing customer satisfaction

Theme

Pursuing plans for the new Harima Factory

Developing a sustainable plan that aims to achieve eﬀectively zero
CO 2 emissions
Improving boiler manufacturing capabilities (quality and eﬃciency)

Improving management eﬃciency

Examining ways to utilize the Supply Chain Lab

Implementing paperless workﬂows and Robotic Process Automation(RPA)
Sharing knowledge and expertise on a companywide basis(Artist s conception of new Harima Factory)
Tentative completion: December 2022
Total investment: approximately JPY 13.0 billion

Compliance
We will continue to promote compliance as a key
foundation that sustains corporate activities throughongoing compliance education and other programs whileworking to realize further improvements in the eﬀectivenessof our risk management activities.

Corresponding principal Materiality and issues
Strengthening corporate governance

Theme

Increasing the eﬀectiveness of complianceand risk management

Improving and enhancing educational programsContinuing and improving risk management activities

23

TAKUMA 2021 ANNUAL REPORT

24

Section 01

Growth Strategies

Business Strategies

Domestic Environment and Energy Business
Municipal Solid Waste Treatment Plant Business

2

Strengths

Since delivering Japan s ﬁrst fully continuous mechanical waste incineration plant in 1963, Takuma has supplied more than 360
municipal solid waste treatment plants, more than any other manufacturer in Japan. In addition to supplying products and services thatmeet regional needs based on the technology and expertise that we have accumulated through a long series of improvements acrossmore than half a century, we are working to further increase the value we provide by incorporating leading-edge technologies like Artiﬁcial
Intelligence (AI) and the Internet of Things (IoT).

Our achievements (cumulative deliveries to local governments)

1

Business Summary

We provide solutions that extend throughout the plant life cycle, from construction (EPC) of municipal solid waste treatment plants
for local governments to maintenance, primary equipment improvement and service life extension, operation management, andoperation (O&M).

Waste incineration plants ……………………………………… over 360 facilities
Recycling plants …………………………………………………… over 90 facilities
Biogas recovery plants …………………………………………………… 2 facilities

3
Principle products
Waste incineration plants, biogas recovery plants, recycling plants, etc.

Market Environment

Some 1,000 facilities in Japan incinerate about 170,000 tons of waste per day, and those plants are aging, with more than 60% ofthem having been operating for at least 20 years. With many facilities built during the 1990s to address the problem of dioxin emissions
reaching the point in their service lives at which they need to be updated, we expect to see strong replacement and service life extension
demand continue for the time being.
Use of the O&M business, which comprises a comprehensive contract for facility operation management and maintenance, and DBO
arrangements, which comprise orders for both facility construction and operation (O&M), is growing from the standpoint of taking
advantage of private-sector expertise. At the same time, facilities are expected to provide functionality that creates new value for theirregion, for example by serving as regional disaster prevention facilities or energy centers, rather than simply treating waste.
Furthermore, as society works to realize carbon neutrality by 2050, we expect to see more sophisticated use of waste to generate
electricity and heat along with growing demand for biogas recovery (methane fermentation) plants and combined systems that pairincineration with methane fermentation and other technologies.

4

Initiatives

Strengthening conventional businesses
Improving quality and strengthening proﬁtability in the plant
operation business and after-sales service businessMaximizing proﬁtability by extending the service life of existing
facilities

Responding to environmental changes
Developing structures that will allow us to provide newservices, for example additional use of private-sector
partners and Regional Circular and Ecological Sphere(Regional CES) businesses

Ensuring a sustained ﬂow of orders by creating customer value

Currently, about 120 of the municipal solid waste treatment plants we have delivered continue to operate, and we are supporting safe,
stable, and appropriate waste treatment in their regions through after-sales service including regular maintenance, functional improvements, service life extension work, and operation management.
In an eﬀort to enhance its after-sales service oﬀerings, the Takuma Group began oﬀering remote support service for customer plants in
2004, and in 2016 we launched the POCSYS ® Plant Optimization Comprehensive Support System, which dramatically enhanced thatfunctionality. Then in 2019, we opened the Solution Lab as a remote monitoring and operation support facility. In addition to supplying safe,
secure, and stable plant operation to customers through 24-hour operational support, we are helping streamline plant operation, for example
to increase the amount of power sold and reduce chemical consumption, by analyzing, visualizing, and otherwise utilizing operating data.
Furthermore, we plan to launch the Supply Chain Lab, an after-sales service facility, in December 2022, and we will work to realize
additional quality and proﬁtability improvements in after-sales service by eﬀectively utilizing these resources.
Going forward, municipal solid waste treatment plants will be called upon to create new value in order to resolve regional issues, forexample by promoting the recovery and use of waste energy, serving as disaster prevention and energy facilities, and revitalizing regional
economies as part of the eﬀort to realize a decarbonized society and Regional Circular and Ecological Sphere (Regional CES) (local SDGs).
In addition to promoting power and labor savings in plant operation through the use of digital technologies while working to realize more
eﬃcient energy recovery through the reﬁnement of combustion technology and energy recovery technology, which are core Takuma
technologies, as well as use of Artiﬁcial Intelligence (AI) and the Internet of Things (IoT), we will help resolve regional issues by creating
new value through the expansion of our Power Retail Business and through partnerships with various companies and organizations.

Materiality

25

Helping combat climate change

Strengthening relationships of trust with customers and communities

Conserving resources and protecting the environment

Pursuing partnerships and innovation

TAKUMA 2021 ANNUAL REPORT

26

Section 01

Growth Strategies

Business Strategies

Water Treatment Plant Business

1

Business Summary

In addition to construction (EPC) and maintenance of water treatment and sludge incineration plants, particularly for sewage treatment
plants run by local governments, we supply operation management and other services.

Principle products
Sewage sludge-fueled power plants, moving-bed sand filtration systems (Uniflow Sand Filter), etc.

2Strengths

Since entering the water treatment ﬁeld in 1962, we have accumulated technology and expertise by supplying water treatment plants
and sludge incineration plants in a variety of ﬁelds, including sewage, human waste, and industrial wastewater. In recent years, we havebeen particularly focused on the sewage treatment ﬁeld, and we are helping resolve customers issues with unique technologies like anenergy-saving and energy-creating sludge-fueled power generation system featuring low emissions of the greenhouse gas N 2O andmoving-bed sand ﬁltration systems (Uniﬂow Sand Filter), of which we have delivered about 2,700 units since 1979.

Our achievements (to date)Moving-bed sand ﬁltration systems (Uniﬂow Sand Filter)…… over 2,700 units
Sewage sludge incineration plants……………………………… over 20 facilities

3

Market Environment

There are some 2,200 sewage treatment plants in Japan, and those facilities are aging, with more than 80% having been operating forat least 15 years.
Additionally, as we work to realize a decarbonized society, there is growing need to reduce greenhouse gases in sewage treatment andto utilize sewage sludge, a type of biomass, as a form of renewable energy.
At the same time, we expect utilization of the private sector through arrangements such as Public Private Partnerships (PPPs) andPrivate Finance Initiatives (PFIs) to increase in the future due to the challenging management environment in which sewage projects run
by local governments must operate.

4

Initiatives

Strengthening conventional businesses
Ensuring a sustained ﬂow of orders for sludge incineration
plantsResponding to environmental changes
Developing structures that will allow us to accept
long-term comprehensive contracts

Expanding the after-sales service business
Accommodating replacement demand from existing facilities

The sludge-fueled power generation system we developed diﬀers from conventional incinerators in that it does not require auxiliary fuel,and it excels in terms of environmental performance thanks to its low emissions of the greenhouse gas N 2O, an issue aﬀecting
incineration treatment of sewage sludge. Moreover, the system is capable of generating electricity, and its low consumption of poweroﬀers excellent energy-saving performance. We have received orders for three plants using this system to date, and we will help reducegreenhouse gas emissions in sewage treatment by continuing to earn more orders in the future.
Additionally, we have delivered numerous high-speed sand ﬁltration systems that boost ﬁltration speed by a factor of two to three while
adopting a compact, space-saving design. We will work to secure more orders by proposing updates that take advantage of thatspace-saving design for existing ﬁltration systems that are due for such service.

Materiality

27

Helping combat climate change

Strengthening relationships of trust with customers and communities

Conserving resources and protecting the environment

Pursuing partnerships and innovation

TAKUMA 2021 ANNUAL REPORT

28

Section 01

Growth Strategies

Business Strategies

Energy Plant Business

1

Business Summary

In addition to construction (EPC) and maintenance of energy plants for private-sector operators, we oﬀer operation (O&M) and otherservices.

Principle products
Biomass power and heat-use plants, RPF power and heat-use plants, industrial waste treatment plants, etc.

2Strengths

Since our founding in 1938, we have manufactured an array of boilers for industrial, power, marine, and other applications, and wehave delivered more than 3,200 boilers throughout Japan and around the world. Over the course of our long history, we have helped
reduce and eliminate dependence on carbon on the part of customers and society through the supply of plants that recover energy from avariety of biomass and non-fossil fuels such as wood, poultry manure, and RPF based on proprietary combustion and heat recovery
technologies that we have improved and evolved together with customers.

Our achievements (to date)
Boilers ……………………………………………………………… over 3,200 units
Of which, biomass boilers…………………………………………… over 630 units
Industrial waste treatment plants …………………………… over 120 facilities

3

Market Environment

Since Japan s 2012 launch of its Feed-In Tariﬀ (FIT) program, which imposes ﬁxed pricing on purchases of renewable energy, demandfor biomass power plants has grown rapidly. Takuma, which has long manufactured biomass boilers, has delivered more than 40 biomass
power and heat-use plants (including facilities that do not take advantage of the FIT program) since 2014, when it delivered its ﬁrst FIT
boiler. That said, as the FIT program is reviewed, we expect demand to shift towards small and medium-size biomass power and heat-use
plants as a way to implement regional-use power supplies and regional decentralized energy.
Additionally, many industrial boilers that use fossil fuels such as coal and heavy fuel oil, which are common in plant applications, aredue to be updated, and we expect that the level of need for conversions to non-fossil fuels such as biomass and RPF will grow as society
works to reduce and eliminate dependence on carbon.

4

Initiatives

Strengthening conventional businesses

Responding to environmental changes

Expanding our market presence through steady orders forbiomass power plants

Capturing demand for fuel conversions in industrial
boilers

Expanding our business through further promotion of proposals
for after-sales service businessWe expect that the business environment in which our customers operate will continue to exhibit major changes in the future, including
the drive to realize carbon neutrality by 2050 and the review of the FIT program.
We will help customers reduce and eliminate dependence on carbon in their business activities while promoting the use of renewableenergy by expanding the introduction of power and heat-use plants that utilize biomass and non-fossil fuels through plans and proposals
that precisely target customers issues and needs based on the technology and expertise we have accumulated through our extensive
track record.
Additionally, we will help customers resolve issues and further reduce and eliminate their dependence on carbon by pursuing not only
precisely-targeted maintenance, but also energy savings, power output increases, functional improvements and service life extensions forequipment, and O&M and other solution proposals for the many plants we have delivered to date.

Materiality

29

Helping combat climate change

Strengthening relationships of trust with customers and communities

Conserving resources and protecting the environment

Pursuing partnerships and innovation

TAKUMA 2021 ANNUAL REPORT

30

Section 01

Growth Strategies

Business Strategies

Overseas Environment and Energy Business

Power Retail Business

1

Business Summary

Takuma Energy Co., Ltd., a Group company, operates the Power Retail Business, which draws on power generated by municipal solid
waste treatment plants and biomass power plants that Takuma has delivered as its principal sources of power.

Overseas Businesses
1

2

Business Summary

We supply construction and maintenance services for biomass power plants and Energy from Waste plants with a focus on Thailand
and Taiwan, where we have local subsidiaries.

Strengths

Takuma Energy Co., Ltd., which was established in August 2015 to supply services that increase the amount of value added by plants
delivered by Takuma through the purchase and supply of power, operates the Power Retail Business.
The company is helping promote renewable energy power with a regional character in a way that takes advantage of the relationshipsthat link Takuma s customers and Group companies, for example by operating a business that facilitates the local production andconsumption of power by supplying power generated by municipal solid waste treatment plants and biomass power plants to public
facilities and other regional energy users in four regions.

Principle products
Biomass power plants,
Energy from Waste plants

Our achievements in local production and consumption of power
Hokutan region, Hyogo Prefecture ……………………… Starting in August 2016
Fujisawa, Kanagawa Prefecture ………………………… April 2017 to March 2021
Kizugawa, Kyoto Prefecture ……………………………… Starting in April 20182

Kasaoka, Okayama Prefecture ………………………… Starting in April 20193

Since delivering a bagasse ﬁred boiler (bagasse: ﬁber remaining after sugarcane is crushed) to a customer in Taiwan in 1949, we havedelivered more than 380 biomass boilers overseas, primarily to customers in Southeast Asia. Approximately 120 of those boilers weredelivered in Thailand, primarily to sugar mills, highlighting how we have contributed to the development of the country s sugar industry.
We have also delivered a total of 16 waste treatment plants to customers in Taiwan, China, South Korea, and the UK since delivering
our ﬁrst such plant overseas in the U.S. in 1986.

Market Environment

The need for decentralized energy as well as the local production and consumption of power is growing from the perspective ofsecuring energy supplies in times of emergency, utilizing energy eﬃciently, and revitalizing regions. We expect the importance of powerand energy services in the Group s business domain to grow in the future, for example in the development of the Regional Circular andEcological Sphere (Regional CES) in waste treatment and in regional-use power supplies in the FIT program.
Additionally, the level of need for renewable energy and CO 2-free power that have environmental value is growing from the perspectiveof reducing and eliminating dependence on carbon in business activities. The market is expected to grow further as society works torealize carbon neutrality by 2050.

43

Market Environment

Although we expect to continue to see a certain level of demand for bagasse-ﬁred biomass power plants in Thailand, competition with
Indian and Chinese manufacturers remains intense. At the same time, the Thai government has announced a policy of promoting biomass
power generation, and demand, including for biomass other than bagasse, is expected to grow.
On the other hand, Energy from Waste projects in the emerging nations of Southeast Asia are often derailed for reasons such as a lackof programs and standards related to waste treatment and insuﬃcient government funding, and a stable market has not yet developed.
That said, the level of need for waste-fueled power generation is rising signiﬁcantly due to population growth and urbanization, and we
expect the sector to remain a growth market over the medium and long term.

Initiatives

Strengthening conventional businesses
Expanding the scale of the business by enhancing products inareas such as renewable energy and CO 2-free power anddeveloping new sales channels

Responding to environmental changes
Examining expansion of our service menu to provide
the power demanded by communities and customers

In addition to working to expand our sales menu, for example with renewable energy power and CO 2-free power, we will seek to further
expand our business involving the local production and consumption of power through region-optimized schemes that maximize use ofenvironmental value and producing region value, with a focus on plants that Takuma has delivered. We will also work to expand our lineof services designed to resolve regional issues through partnerships with a variety of companies.

Materiality

Helping combat climate change
Strengthening relationships of trust with customers and communities

4

Initiatives

Strengthening conventional businesses
Ensuring a sustained ﬂow of orders for biomass power plants
Expanding the ﬂow of orders for maintenanceRealizing additional expansion in the local production andconsumption of power

31

Strengths

Pursuing partnerships and innovation

Responding to environmental changes
Capturing orders for Energy from Waste plants anddeveloping associated structures
Implementing global procurement

With regard to biomass power plants, we will strive to earn orders on an ongoing basis by both working to achieve further cost
reductions, such as by expanding the scope of overseas procurement, and by diﬀerentiating ourselves from Indian and Chinese
manufacturers, for example by enhancing maintenance services through our local subsidiary in Thailand.
With regard to Energy from Waste plants, we will put in place structures to secure orders, for example partnerships with local
companies, in an eﬀort to capture demand in the future, particularly in Thailand and Taiwan.

Materiality

Helping combat climate change

Strengthening relationships of trust with customers and communities

Conserving resources and protecting the environment

Pursuing partnerships and innovation

TAKUMA 2021 ANNUAL REPORT

32

Section 01

Growth Strategies

Business Strategies

Package Boiler Business

Equipment and Systems Business

Package Boiler Business

Equipment and Systems Business

1

1

Business SummaryGroup company Nippon Thermoener Co., Ltd., manufactures, sells, and maintains general-purpose boilers in addition to designing andbuilding related heat source equipment and systems for various types of manufacturing plants as well as hotels, hospitals, commercial
buildings, and other facilities.

Business SummaryGroup companies SUNPLANT Co., Ltd., and Dan-Takuma Technologies Inc. design and build various types of building equipment,
including air conditioning, water supply and drainage sanitation, and ﬁreﬁghting systems, and they manufacture, sell, and maintain equipment
for the semiconductor and electronic device industries, including clean rooms, chemical air ﬁlters, and magnetically shielded chambers.

Principle products

Principal products and services

Once-through Boilers (Equos)

Building equipment installation, chemical air ﬁlters,
environmental monitoring systems for use in clean rooms

Vacuum-type Hot Water Heaters (Vacotin Heater)
Heat-transfer Boilers (Thermoheater)
Flue and Smoke Tube Boilers (RE Boiler)
Hybrid Hot Water Systems, etc.

22Strengths

Over the many years since its establishment in 1961, Nippon Thermoener Co., Ltd., has supported consumer lifestyles as well as
industry by accumulating extensive experience in an array of package boilers, a type of boiler, which are used in a variety of industries
and applications. In an eﬀort to accommodate the changing times and environment as a manufacturer specializing in heat source
equipment, the company meets a diverse range of customer needs by developing new heat source systems such as hybrid hot water
systems based on the technological capabilities and expertise it has accumulated over its long history.

3

Market Environment

4

Initiatives

Strengthening conventional businesses
Maintaining and expanding the scale of orders in the existing
domestic general-purpose boiler market
Expanding our overseas businessResponding to environmental changes
Building and expanding a basis for proﬁt by developing
a new market for heating systems based on adecarbonized society

We will support consumer lifestyles as well as industry while working to maintain and expand the scale of orders received in the domestic
market by proposing optimal systems that meet individual customers needs based on our line of diverse products and to expand our overseas
business, particularly in Southeast Asia, where our Thai subsidiary is located. At the same time, we will help reduce greenhouse gases bypromoting energy-saving, high-eﬃciency systems.
Additionally, we will work to develop a new heat source equipment market that suits the characteristics of the decarbonized society of the future byoﬀering systems with greater energy-saving eﬀectiveness, for example hybrid hot water systems that combine heat pumps with vacuum-type hot water
heaters, and new heat source equipment that uses non-fossil energy sources, for example wood chip-fueled biomass boilers.

Materiality

33

SUNPLANT Co., Ltd., which operates a building equipment business, was established as a boiler installation company in 1941. After
entering the equipment construction business in 1965, the company began oﬀering a variety of building equipment for use in education
and research facilities, healthcare and social welfare facilities, commercial and cultural facilities, factories, railroad facilities, and othersites. In this way, it has supplied pleasant environments that are custom-made to suit a variety of applications and requirements based on
the technology and expertise it has accumulated over many years.
Since its establishment in 1969, Dan-Takuma Technologies Inc., which operates a semiconductor industry equipment business,
contributes to the development of the semiconductor and electronic device industries by supplying an array of clean technologies,
primarily to customers in the semiconductor industry, and by drawing on the high level of trust it has earned through its extensive trackrecord of deliveries to develop products that are customized in collaboration with customers.

3

Although the domestic general-purpose boiler market has matured and is on track to shrink over the medium and long term, the sector
remains broad in its reach. We expect a certain level of demand to continue for the time being, for example due to replacement demand.
Additionally, demand for energy-saving boilers is expected to increase overseas, particularly in emerging nations. Furthermore, eﬀorts todevelop boilers with additional energy savings and higher energy eﬃciency are expected to accelerate as part of the eﬀort to reduce andeliminate dependence on carbon, and over the long term, the ﬁeld is likely to transition to heat source equipment that uses non-fossil energy.

Helping combat climate change

Strengthening relationships of trust with customers and communities

Conserving resources and protecting the environment

Pursuing partnerships and innovation

Strengths

Market Environment

Although there are concerns that construction demand may be aﬀected by a temporary drop-oﬀ in private-sector investment due to theeﬀects of the COVID-19 pandemic, robust demand is expected to continue over the medium and long term thanks to the replacement
and repair of aging public facilities and the construction of new healthcare and social welfare facilities.
Additionally, the market for semiconductor manufacturing equipment is expanding thanks to rising semiconductor demand worldwide,
which is being fueled by the adoption of new technologies such as Artiﬁcial Intelligence (AI), the Internet of Things (IoT), and 5G̶allareas where there has been steady progress̶and by the trend towards digitalization. Going forward, markets serving the semiconductor
and electronic device industries are expected to grow over the medium and long term despite short-term ﬂuctuations.

4

Initiatives

Strengthening conventional businesses
Expanding the ﬂow of orders by improving sales andconstruction capability (equipment)

Responding to environmental changes
Improving functionality and expanding business
opportunities through alliances (systems)

Expanding market share by improving products
competitiveness (systems)

In the building equipment business, we will work to further strengthen our sales and installation capabilities by hiring, retaining, andtraining human resources, and we will strive to achieve steady growth in the scale of orders received by creating optimal environmentsthat are custom-made to suit a variety of applications and requirements.
For semiconductor manufacturing equipment, we will work to boost competitiveness by developing products that are customized incollaboration with customers and through joint research with universities, and we will strive to expand our business by supplying productsthat meet customer needs through a variety of alliances.

Materiality

Strengthening relationships of trust with customers and communities

Pursuing partnerships and innovation

TAKUMA 2021 ANNUAL REPORT

34

Section 01

Growth Strategies

Our Achievements

Main Recent Projects

Water Treatment Plants

This page introduces some of the main plants that Takuma supplied during FY2020 in the Domestic Environment and Energy Business.

Municipal Solid Waste Treatment Plants
New Construction
The Clean Plaza/
Regional Cleaning Union of thecity of Ota and three towns
Project name: Regional Cleaning Union of the city of Ota
and three towns Municipal Waste Treatment
Facility Construction and Operation Project
Location:
Gunma Prefecture
Capacity:
330 tons per day(165 tons per day × 2 units)
Power output: 9,700 kW

Tokyo Basin Sewerage Tamagawa Joryu
Water Reclamation Center
Project name: Tamagawa Joryu Water Reclamation Center Sludge Incineration
Facility Reconstruction Project
Location:
Tokyo
Capacity:
Sludge-fueled power generation system
Treatment capacity: 140 tons per day × 1 unit
Power output: 137 kW

Yahagi River Basin Sewerage
Yahagigawa Sewage Treatment Center
Project name: Yahagi River Basin Sewerage Water Treatment
Facility Equipment Project (No.1)
Location:
Aichi Prefecture
Capacity:
Moving-bed upﬂow continuous sand ﬁlter
Treatment volume: 20,000 m³ per day
Equipment speciﬁcations:
M60 × 6 units per pond, total of 2 ponds

Energy Plants
Miyazu-Yoza Clean Center
Project name: Miyazu-Yoza Wide-area Waste Treatment
Facility Development and Operation Project
Location:
Kyoto Prefecture
Capacity:
Waste incineration facility: 30 tons per day(30 tons per day × 1 unit)
Methane gasiﬁcation facility: 20.6 tons per day(20.6 tons per day × 1 system)
Recycling facility: 14.9 tons per day
Power output: 270 kW

Hikarigaoka Incineration Plant
Project name: Hikarigaoka Incineration Plant
Reconstruction Project
Location:
Tokyo
Capacity:
300 tons per day(150 tons per day × 2 units)
Power output: 9,150 kW

Eco Clean Center Nanetsu(No.1 Clean Center)
Project name: Nanetsu Seiso Kumiai(Sanitation Association)
New Waste Treatment Facility
Development and Operation Project
Location:
Fukui Prefecture
Capacity:
84 tons per day(42 tons per day × 2 units)
Power output: 1,470 kW

Primary Equipment Improvements

Tankou District Sanitation Center Incineration
Plant Waste Incineration Facility
Project name: Tankou District Sanitation Center Incineration
Plant Waste Incineration Facility Primary
Equipment Improvement Project
Location:
Iwate Prefecture
Capacity:
240 tons per day(120 tons per day × 2 units)
Power output: 1,990 kW

35

Clean OSHIMA
Project name:Clean OSHIMA Primary Equipment
Improvement Project
Location:
Hokkaido
Capacity:
126 tons per day(63 tons per day × 2 units)
Power output: 1,600 kW

Hitachiota City Clean Center
Project name:Hitachiota City Clean Center Primary
Equipment Improvement Project
Location:
Ibaraki Prefecture
Capacity:
100 tons per day(50 tons per day × 2 units)

Gifu Biomass Power Co., Ltd.
Project name: Power Plant No.2 Generation Equipment Installation Project
Location:
Gifu Prefecture
Capacity:
Fuel: Wood fuelSteam conditions (normal operation):
28 tons per hour × 5.98 MPaG × 465℃
Power output: 6,800 kW

Nihonkaisui Co., Ltd.
Project name: Ako Power Station No.2 Biomass
Power Generation Equipment Construction Project
Location:
Hyogo Prefecture
Capacity:
Fuel: PKS, Wood fuelSteam conditions (normal operation):
125 tons per hour × 6.0 MPaG × 460℃
Power output: 30,000 kW

TAKUMA 2021 ANNUAL REPORT

36

Section 02

Corporate Governance6

Through eﬀorts to strengthen corporate governance, enhance risk management, and implement thoroughcompliance, the Takuma Group is working to build structures that make possible highly transparent andappropriate decision-making and to maximize its corporate value by assessing and managing risk in an
appropriate manner and by preventing the cessation of business operations and loss of social trust fromviolations of laws and regulations.

Corporate governance structures
1

Takuma's governance structures

We have put in place the following governance structures:

Reporting

Audit &
Supervisory
Committee'sOﬃce

Cooperation
Assistance

Reporting andstatement of views

Audit &
Supervisory
Committee

Appointment
and Dismissal

Auditing

Variouscommittees

Compliance & CSR
Promotion DivisionInternal auditing

Auditing
Cooperation

Nominating &Compensation
Advisory
Committee
Consultations

Reporting

Supervision

ReportingBoard ofDirectors

Discussion and reporting
Selection, dismissal, and supervision
Appointment and Dismissal

Representative
Director

Committee of
ExecutiveOﬃcersInternal Audit
Department

Internal
auditing

Discussion of andreporting onimportant matters(Deliberation of
Executiveof instructions
important matters) IssuanceOﬃcers Execution ofand communicationof information
responsibilities

Board of Directors

As of June 25, 2021, the Board of Directors was comprised of six directors (excluding directors who are members of the Audit& Supervisory Committee) and ﬁve directors (of whom four were outside directors). The Board of Directors meets regularly oncea month as a rule and whenever else it is necessary to make decisions about important issues related to business management
and issues established by law and ordinances, as well as to oversee the execution of the directors duties.
Directors: 11 (10 men and 1 woman), including 4 outside directors (3 men and 1 woman)

4

Executive Oﬃcers

In order to accelerate management decision-making and clarify where management responsibilities are placed, we haveadopted an executive oﬃcer system in which we appoint executive oﬃcers who are entrusted with the responsibility of executing
our business activities. As of June 25, 2021, there were 15 executive oﬃcers (including those who also serve as directors).
Moreover, we have also established a Committee of Executive Oﬃcers, which is chaired by the president/chief executive oﬃcer,
as an organization that deliberates matters that are brought up at meetings of the Board of Directors and other important issues
related to the 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 to the divisions
that are to execute them.

5

Audit & Supervisory Committee

An Audit & Supervisory Committee that consists of ﬁve members, of whom four are outside directors, is responsible foraccounting and operational audits. Members of the committee attend important meetings, including those of the Board of
Directors and the Committee of Executive Oﬃcers, and they strive to understand and observe the status of business execution
in a timely and appropriate manner. Drawing on their professional background and experience, they express their opinions asnecessary 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 representative director holds
regular meetings with committee members to ensure good communication.

37

Takuma has established an Audit & Supervisory Committee's Oﬃce to help carry out the committee's work.

7

Nominating & Compensation Advisory Committee

To augment the structures described above, we have established a Nominating & Compensation Advisory Committee
comprised of independent oﬃcers, representative directors, and the oﬃcer in charge of human resources. The purpose of thecommittee, a majority of whose membership consists of independent outside directors, is to increase transparency andobjectivity in the selection of candidates for director and executive oﬃcer positions and in the determination of thecompensation and other terms so as to enhance the oversight function of the Board of Directors.

Appointment and dismissal criteria for directors and executive oﬃcers
1

Policy on the appointment and dismissal of executives

To maintain an appropriate number of members who can conduct eﬀective discussions and assure that the body canappropriately carry out its role of decision-making on basic policies and important matters related to the company's
management and supervision of directors and executive oﬃcers execution of their job responsibilities, Takuma takes various
steps to ensure that the Board of Directors membership exhibits a good balance of knowledge, experience, and ability. The
Policy on the Appointment and Dismissal of Executives put in place by the Board of Directors establishes appropriate processes
for appointing and dismissing executives along with basic requirements for director candidates and executive oﬃcers; criteria for
appointing director candidates, executive oﬃcers, and other positions; and criteria for dismissing directors and executive oﬃcers.

Observing andguidance

Reporting

Recommendations

Appointment and Dismissal

Education, instructions, and reporting
Reporting

Divisions and Centers

Auditing of accounts

Accounting
Auditors*As of June 25, 2021

ReportingAppointment
and Dismissal

ReportingGeneral Meeting of Shareholders

Reporting3

Audit & Supervisory Committee's Oﬃce

Basic policy on corporate governanceIn order to safeguard and steadily increase Takuma's corporate value over the long term, it is essential not only to ensure thedevelopment of the company's businesses, but also to clearly deﬁne governance in corporate operations̶that is, to ensure thatshareholders oversight of operations is carried out appropriately and that oﬃcers carry out their operational responsibilities by meansof a process that is clear, rational, eﬃcient, and legally compliant. For that reason, we believe that understanding the Corporate
Governance Code and putting it into practice in an autonomous and systematic manner are top-priority management issues.

2

Corporate Governance2

Procedures for appointing and dismissing executives

The Nominating & Compensation Advisory Committee, whose membership consists of independent oﬃcers, representative
directors, and the oﬃcer in charge of human resources (with a majority of independent outside directors), discusses theappointment and dismissal of directors and executive oﬃcers, including the position of president and CEO, in accordance with
the Policy on the Appointment and Dismissal of Executives put in place by the Board of Directors. The Board of Directors
makes ﬁnal decisions in such matters after suﬃcient discussion based on factors including directors past and present
performance of their responsibilities while respecting reports and advice from the Committee.

Selection criteria for independent executives
Takuma designates all outside executives who satisfy certain qualiﬁcations as independent executives.
We assess the independence of outside directors based on standards of independence adopted by the Tokyo Stock Exchange
as well as our own internal Standards for Determining the Independence of Outside Executives.

Standards for Determining the Independence of Outside Executives
In Takuma's view, the following individuals do not exhibit suﬃcient independence to qualify as an independent executive:(1) Individuals/entities whose principal business partner is Takuma*¹ and their oﬃcers*²(2) Principal business partners of Takuma*³ and their oﬃcers(3) Consultants, accounting experts, and legal experts who are receiving ﬁnancial compensation or other assets in excess ofa certain amount*⁴ from Takuma, apart from executive compensation (If the entity receiving such assets is an organizationsuch as a corporation or an association, then this criterion refers to individuals belonging to that organization.)(4) Individuals/entities that receive donations or aid in excess of a certain amount*⁴ from Takuma, apart from executive
compensation (If the entity receiving such assets is an organization such as a corporation or an association, then thiscriterion refers to individuals belonging to that organization.)(5) Major shareholders*⁵ of Takuma and their oﬃcers*1: Individuals/entities whose principal business partner is Takuma refers to individuals and entities that earned at least 2% of their consolidated net
sales during the most recent business year from Takuma.
*2: Oﬃcers refers to managing directors, executive oﬃcers, and other personnel.
*3: Principal business partners of Takuma refers to individuals and entities whose payments to Takuma constituted at least 2% of Takuma's consolidated
net sales during the most recent business year.
*4: A certain amount refers to at least JPY 10 million (for individuals) or at least 2% of gross sales (for organizations) during the most recent businessyear.
*5: Major shareholder refers to an individual or entity that holds at least 10% of the total voting rights.

TAKUMA 2021 ANNUAL REPORT

38

Section 02

Compensation and other remuneration paid to directors(Except Audit & Supervisory Committee members)
1

Matters relating to the General Meeting of Shareholders resolution concerning director
compensation and other remuneration

Meeting on June 28, 2016, the 112th Annual General Meeting of Shareholders resolved to limit compensation and other
remuneration paid to directors (except Audit & Supervisory Committee members) to JPY 350 million per year. When the Annual
General Meeting of Shareholders in question ended, there were six directors (not counting Audit & Supervisory Committee
members).
Meeting on June 26, 2019, the 115th Annual General Meeting of Shareholders resolved to pay monetary compensation rights
not greater than JPY 90 million per year to directors (except Audit & Supervisory Committee members) for use in acquiring
restricted stock, separate from the above compensation limit. (The resolution limited the total number of shares of Takuma
common stock issued or disposed for this purpose to 120,000 shares per year.) When the Annual General Meeting of
Shareholders in question ended, there were six directors (not counting Audit & Supervisory Committee members).
Meeting on June 28, 2016, the 112th Annual General Meeting of Shareholders resolved to limit compensation and remuneration
paid to directors who are members of the Audit & Supervisory Committee to JPY 72 million per year. When the Annual General
Meeting of Shareholders in question ended, there were four directors that were members of the Audit & Supervisory Committee.

2

Method for formulating policies for determining of compensation and other remuneration

Takuma's Policy on Executive Compensation and Other Remuneration, which was established by resolution of the Board of
Directors, codiﬁes Takuma's policies for determining compensation and other remuneration for directors (except Audit &Supervisory Committee members). The policy is revised as necessary by resolution of the Board of Directors following
consultation with, and consideration of recommendations submitted by, the Nominating & Compensation Advisory Committee.

3

Overview of policies for determining compensation and other remuneration（1）Basic policies
Takuma has adopted the following basic policies concerning the determination of compensation:● Compensation should be suited to the role and responsibilities of the director in question, and it should help the company

secure talented human resources.
● The compensation system should reﬂect appropriate consideration of the need to motivate directors to increase ﬁscal year
performance as well as corporate value over the medium- and long-term.
● The process used to determine compensation should exhibit transparency and objectivity so that the company can fulﬁll its
obligation of accountability to shareholders and other stakeholders.

（4）Justiﬁcation for the Board of Directors determination that the compensation and other remuneration
for individual directors for the business year under review are in line with applicable policies
The suitability of compensation and other remuneration for directors during the business year under review was veriﬁed by the Nominating &Compensation Advisory Committee based on factors including the Group's performance, compensation levels for executives at othercompanies, and employee salary levels by means of a transparent and highly objective process in accordance with Takuma s Policies on
Executive Compensation and Other Remuneration, and the individual compensation packages were ﬁnalized by the Board of Directors after
suﬃcient discussion while respecting the Committee's report. As a result, the Board of Directors has determined that the contents of thosecompensation packages are appropriate and in accord with applicable policies.

（5）Matters related to performance-linked compensation
Because the Group's business operates primarily on a build-to-order basis and because it considers consolidated ordinary
proﬁt to be the most important management indicator, consolidated order value and consolidated ordinary proﬁt serve as key
performance indicators in calculating bonuses that are based on ﬁscal year performance.
Speciﬁcally, a calculation table is used to calculate a coeﬃcient based on the consolidated ordinary proﬁt for the businessyear in question, the rate of growth relative to the average consolidated ordinary proﬁt for the most recent three years, the extent
to which the consolidated ordinary proﬁt target has been achieved, and the extent to which the consolidated order value target
has been achieved. Bonus amounts are then determined based on this coeﬃcient. (Consolidated ordinary proﬁt performanceﬁgures are calculated before deducting executive bonuses at companies included in consolidated accounting.) Performance
forecasts included in the ﬁnancial brieﬁng announced in May are used as target values in the evaluation.
Targets and results for these indicators during the business year under review were as follows: actual consolidated order valueof JPY 188,563 million versus a target of JPY 180,000 million, and actual consolidated ordinary proﬁt of JPY 11,234 million(before deducting executive bonuses) versus a target of JPY 11,500 million.

（6）Non-monetary compensation and remuneration
Takuma oﬀers directors stock compensation in the form of shares of restricted stock as a medium- and long-term incentive
and as a means of sharing shareholder value. Transfer is restricted for a period of 30 years from the date on which theallocation of Takuma common stock is made, and the restriction is removed when that period ends or if the individual inquestion passes away, completes his or her term, retires, or otherwise ends his or her involvement with the company before theperiod ends for a legitimate reason approved in advance by the Board of Directors.

（7）Total amounts of compensation and other remuneration for directors
Executive category
Director (except Audit & Supervisory Committee member)
Director (Audit & Supervisory Committee member) (outside director)

Total compensation Total compensation and other remuneration by type (millions of yen)
Number ofand other
Performance-linked
Non-monetary
executives
Basic
remunerationcompensation andcompensationcompensation
includedother remunerationand other remuneration(millions of yen)283
56（36）

196

40

45

56（36）（2）Compensation system
Compensation for directors and executive oﬃcers consists of ﬁxed compensation, bonuses paid according to ﬁscal year
performance, and stock compensation (compensation in the form of restricted stock), which is used to motivate recipients toincrease medium- and long-term corporate value.
● Fixed compensation
Fixed compensation is set depending on the role and responsibilities of each position and paid on a monthly basis.
● Bonuses
Takuma has adopted a set of standards for calculating bonuses based on indicators such as ﬁscal year performance andachievement of targets, and the Board of Directors determines whether to pay bonuses and, if so, in what amount using
those standards as a guide. Bonuses are paid at predetermined times each year. As a general rule, bonuses are capped at
a maximum of 25% of ﬁxed salary (annual amount).
● Stock compensation
Stock compensation takes the form of shares of restricted stock that are granted in advance. Monetary compensation rights
set depending on the role and responsibilities of each position are allocated at predetermined times each year, and sharesin Takuma are granted in exchange for the pay-in of those rights. As a general rule, stock compensation is capped at a
maximum of 30% of ﬁxed salary (annual amount), with the percentage increasing with seniority of position.

Evaluation of the eﬀectiveness of the Board of Directors（3）Procedure for determining compensation

Internal control

The Nominating & Compensation Advisory Committee, whose membership consists of independent oﬃcers, representative
directors, and the oﬃcer in charge of human resources (with a majority of independent outside directors), discusses mattersrelated to compensation and remuneration programs, the amount or calculation standard for each director s compensation andother remuneration, and other executive oﬃcers compensation and other remuneration in accordance with the Policy on
Executive Compensation and Other Remuneration and reports the results to the Board of Directors. Having received that report,
the Board of Directors makes ﬁnal decisions on related matters after suﬃcient discussion while respecting the Committee's
report.
In determining the amounts of individual compensation packages, the suitability of those packages is veriﬁed based on factors
including the Group's performance, compensation levels for executives at other companies, and employee salary levels.
Compensation and other remuneration for the business year under review were discussed by the Nominating & Compensation
Advisory Committee, which addressed the amounts and calculation standards for each director while referring to executive
compensation research data from an outside research organization, and determined by the Board of Directors based on theCommittee's report.

39

Corporate Governance67（6）*Performance-linked compensationand other remuneration consistsof bonuses awarded to directors(exce pt Au dit & S u p er viso r yCommittee members).
*Non-monetary compensation andother remuneration consists ofshares of restricted stock granted
to directors (except Au dit &Supervisory Committee members).

In order to increase the eﬀectiveness of the Board of Directors, all directors participate in a questionnaire and interviews
about the body s eﬀectiveness. Those results are then analyzed, evaluated, reported to the Board by the executive in charge ofthe evaluation process, and discussed by the Board.
In the FY2020 evaluation, the eﬀectiveness of the Board of Directors was analyzed and evaluated from four perspectives: thebody's composition, its operation, the responsibilities of its members, and its overall eﬀectiveness. This evaluation found thatthe Board had operated in an eﬀective and eﬃcient manner, for example by holding meetings online and working to provide
materials on a paperless basis, and that it was implementing ongoing initiatives to improve its functionality and ensure its
eﬀectiveness, for example by evaluating items recorded in meeting minutes, from the standpoint of facilitating energetic
meetings and enhancing discussions. As a result, the Board was determined to be functioning in an eﬀective manner. At thesame time, the process identiﬁed areas where improvements could be made, including discussing and providing information
about progress towards strategic themes informed by a long-term perspective. We will continue to work to improve theeﬀectiveness of the Board of Directors based on the results of this analysis and evaluation.

Takuma has adopted a Basic Policy for Establishment of an Internal Control System (the full text is available on our website)in accordance with the Companies Act. We continue to review and improve this policy in response to changing circumstances.
Working towards thorough compliance, Takuma built a compliance promotion organization in FY2006 in order to continuously
implement enlightenment and educational activities that make corporate ethics, related laws and ordinances, and internal rules
fully understood. To control the danger of loss, we have also prepared a Risk Management Code that determines the person
in charge of each risk, and we set up our risk management organization according to that Code. When the unexpected occurs,
emergency headquarters are established with the company president as the director in charge of risk management, and anorganization is put in place in order to minimize and prevent further damage through prompt action.
Internal control, constructed and evaluated in order to report on and prevent misstatements in our ﬁnancial reporting, is basedon the Financial Instruments and Exchange Act. This internal control on ﬁnancial reporting for the Group has resulted in reportsthat indicate this system has been eﬀective. In this way, we will continue to work in the future to ensure thorough compliancewhile carrying out business properly and eﬃciently while also deepening risk management.

TAKUMA 2021 ANNUAL REPORT

40

Section 02

Corporate Governance

Executive Proﬁles*As of June 25, 2021

Directors

President and Representative Director & Chief Executive Oﬃcer

Director & Senior Managing Executive Oﬃcer

Director (Audit & Supervisory Committee Member)

Outside Director (Audit & Supervisory Committee Member)

Hiroaki Nanjo

Tsuyohito Nishiyama

Keizo Masugi

Osamu Iwahashi

April 1982 Joined the Company
April 2009 General Manager of Environmental Engineering
Department 1, Project Center, Engineering Group
September 2010 General Manager of Energy Engineering
Department 1, Project Center, Engineering Group
April 2013 Executive Oﬃcer of the Company
Deputy Executive Manager of Project Center,
Engineering Group and General Manager ofEnergy Engineering Department 1
April 2014 Executive Manager of Project Center,
Engineering Group
June 2015 Director & Executive Oﬃcer of the Company
April 2016 Director & Managing Executive Oﬃcer of the Company
Executive Manager of Engineering Group and
Executive Manager of Management Center
April 2018 Director & Senior Managing Executive Oﬃcer
April 2019 President and Representative Director & Chief
Executive Oﬃcer (up to the present)

Mr. Hiroaki Nanjo has mainly been engaged in the Planning Technology Division,and currently supervises the overall management as Chief Executive Oﬃcer, after
serving as a Director & Senior Managing Executive Oﬃcer and Executive Managerof the Engineering Group. He possesses abundant experience and knowledge
regarding operations and management of the Company.

Mr. Tsuyohito Nishiyama has mainly been engaged in the Business Administration
Division, the Marketing Division and the Corporate Planning & Administration
Division, and currently serves as a Senior & Managing Executive Oﬃcer andExecutive Manager of Corporate Marketing Group that supervises overall marketing.
He possesses abundant experience and knowledge regarding operations andmanagement of the Company.

January 2001 Joined the Company
April 2014 General Manager of Accounting Department,
Corporate Planning & Administration Division
April 2016 General Manager of Corporate Planning Department,
Corporate Planning & Administration Division
April 2018 General Manager of General Aﬀairs Department andGeneral Manager of Legal Aﬀairs Department,
Corporate Services Division
April 2021 Assistant General Manager of Audit & Supervisory
Committee's Oﬃce
June 2021 Director (Standing Audit & Supervisory Committee
Member) of the Company (up to the present)

April 1974 Joined the National Police Agency
March 1985 First Secretary, Embassy of Japan in Thailand
August 1995 Chief Constable of Kumamoto Prefectural Police
August 1999 Director General for Crisis Management Policy
Coordination of Cabinet Security and Crisis
Management Oﬃce, Cabinet Secretariat
June 2004 Director General of Commissioner-General's
Secretariat, National Police Agency
March 2005 Director General of Kinki Regional Police
October 2006 Joined ALL NIPPON AIRWAYS CO., LTD.
(currently ANA HOLDINGS, INC.)
Senior Advisor
September 2007 Outside Corporate Auditor of SANKO MARKETINGFOODS CO., LTD.
June 2012 External Auditor of the Company
November 2013 Retired from ANA HOLDINGS, INC.
December 2013 Executive Director of Public Interest Incorporated
Foundation Japan Police Scholarship Association
June 2016 Director of the Company (Audit & Supervisory
Committee Member) (up to the present)
September 2019 Resigned from Outside Corporate Auditor of
SANKO MARKETING FOODS CO., LTD.

Mr. Keizo Masugi has mainly been engaged in the accounting department and Corporate
Planning & Administration Division, and served as General Manager of General Aﬀairs
Department and Legal Aﬀairs Department handling shareholder response and other generalaﬀairs duties and as well as preventive legal work and other legal aﬀairs. He currently serves
as a Standing Audit & Supervisory Committee Member. He possesses abundant experienceand a wide range of knowledge regarding operations and management of the Company.

Mr. Osamu Iwahashi has served in many important positions in the National Police
Agency, and in addition to possessing abundant experience and a high level of insight
regarding various types of risk management, has served for many years as an External
Auditor and Director who is an Audit & Supervisory Committee Member of listedcompanies, including the Company, and possesses knowledge regarding ﬁnance andaccounting from his experience participating in audit and supervisory operations.

Director & Senior Managing Executive Oﬃcer

Director & Managing Executive Oﬃcer

Outside Director (Audit & Supervisory Committee Member)

Outside Director (Audit & Supervisory Committee Member)

Hideki Takeguchi

Koji Tanaka

Tomomi Fujita

Yoshiaki Ito

April 1985 Joined the Company
April 2012 Deputy General Manager of Environmental
Engineering Department 1, Project Center,
Engineering Group
April 2014 General Manager of Environmental Engineering
Department 1, Project Center, Engineering Group
April 2015 Executive Oﬃcer of the Company
Deputy Executive Manager of Project Center,
Engineering Group and General Manager ofEnvironmental Engineering Department 1
April 2016 Executive Manager of Project Center, Engineering Group
June 2016 Director & Executive Oﬃcer of the Company
April 2018 Director & Managing Executive Oﬃcer
April 2019 Director & Senior Managing Executive Oﬃcer(up to the present)
Executive Manager of Engineering Group and
Executive Manager of Management Center(up to the present)

April 1986 Joined the Company
April 2009 Deputy General Manager of European Operations
Department, Corporate Planning & Administration Division
August 2011 General Manager of Corporate Planning Department,
Corporate Planning & Administration Division
April 2014 General Manager of Human Resources Department,
Corporate Services Division
April 2017 Executive Oﬃcer of the Company
Executive Manager of Compliance & CSR Promotion
Division, Executive Manager of Corporate Services
Division and General Manager of Legal Aﬀairs Department
June 2017 Director & Executive Oﬃcer of the Company
April 2018 Executive Manager of Compliance & CSR Promotion
Division and Executive Manager of Corporate
Services Division
April 2021 Director & Managing Executive Oﬃcer (up to the present)
Executive Manager of International Division and Executive
Manager of Compliance & CSR Promotion Division
June 2021 Executive Manager of International Division(up to the present)

Mr. Hideki Takeguchi has mainly been engaged in the Planning Technology Division,and currently serves as a Director & Senior Managing Executive Oﬃcer andExecutive Manager of Engineering Group that supervises overall engineering. He
possesses abundant experience and knowledge regarding operations andmanagement of the Company.

Mr. Koji Tanaka has mainly been engaged in the Information Systems Division, neutral
divisions such as human resources, Corporate Planning & Administration Division andthe International Division, and currently serves as a Managing Executive Oﬃcer andExecutive Manager of the International Division, which is responsible for theCompany's overseas business. He possesses abundant experience and a wide range
of knowledge regarding operations and management of the Company.

Director & Executive Oﬃcer

Director & Executive Oﬃcer

Outside Director (Audit & Supervisory Committee Member)

Kunio Hamada

Hiroshi Oishi

Tetsuya Kaneko

July 1990 Joined the Company
April 2012 Deputy General Manager of Cost Control & Project
Administration Department, Management Center,
Engineering Group
June 2013 General Manager of Cost Control & Project
Administration Department, Management Center,
Engineering Group
April 2018 Executive Oﬃcer of the Company
Deputy Executive Manager of Corporate Planning &Administration Division and General Manager ofCorporate Planning Department
April 2021 Executive Manager of Corporate Planning &Administration Division (up to the present)
June 2021 Director and Executive Oﬃcer of the Company(up to the present)

Mr. Kunio Hamada has mainly been engaged in the engineering division and costmanagement division, and currently serves as Executive Oﬃcer and Executive
Manager of Corporate Planning & Administration Division responsible for ﬁnance andformulation and implementation of corporate plans. He possesses abundant
experience and a wide range of knowledge regarding operations and management of
the Company.

41

April 1985 Joined the Company
April 2012 General Manager of Project Administration
Department 1, Business Administration Division,
Corporate Marketing Group
April 2014 General Manager of Corporate Planning Department,
Corporate Planning & Administration Division
April 2015 Executive Oﬃcer of the Company
Deputy Executive Manager of Corporate Planning &Administration Division and General Manager ofCorporate Planning Department
April 2016 Executive Manager of Corporate Planning &Administration Division
June 2016 Director & Executive Oﬃcer of the Company
April 2018 Director & Managing Executive Oﬃcer
April 2019 Director & Senior Managing Executive Oﬃcer(up to the present)
Executive Manager of Corporate Marketing Groupand Executive Manager of Business Administration
Division (up to the present)

April 1988 Joined The Dai-Ichi Kangyo Bank, Ltd.
(currently Mizuho Bank, Ltd.)
January 2008 Deputy General Manager of Human Resources
Department, Mizuho Securities Co., Ltd.
January 2013 Deputy General Manager of Corporate Planning
Department
April 2013 General Manager of Securities & Trust Promotion
Department, Mizuho Bank, Ltd.
April 2016 General Manager of Customer Service Department
and General Manager of Management Department,
Mizuho Financial Group, Inc.
August 2019 Executive Oﬃcer of the Company
Deputy Executive Manager of Energy Plant Division,
Corporate Marketing Group
April 2021 Executive Manager of Corporate Services Division(up to the present)
June 2021 Director and Executive Oﬃcer of the Company(up to the present)

Since joining The Dai-Ichi Kangyo Bank, Ltd. (currently Mizuho Bank, Ltd.), Mr. Hiroshi Oishi
engaged in various operations at the bank and its group companies including deposits, moneytransfers, loans, currency exchange, business planning, human resources and customer service.
At the Company, he has engaged in product and service sales in the marketing division, andcurrently serves as Executive Oﬃcer and Executive Manager of Corporate Services Division
responsible for general aﬀairs and human resources. He possesses abundant experience and awide range of knowledge regarding operations and management of the Company.

October 2004 Registered as Attorney at Law(Osaka Bar Association)
Joined Kitahama Partners
January 2012 Partner of Kitahama Partners
March 2016 Left Kitahama Partners
April 2016 Founded InnoventierPartner of Innoventier (up to the present)
February 2017 Director, Licensing Executive Society JAPAN
April 2018 Assistant Lecturer, Kyoto University Law School(up to the present)
June 2019 Director (Audit & Supervisory Committee Member)of the Company (up to the present)
June 2019 Outside Auditor of TAIYO YUDEN CO., LTD.
(up to the present)
February 2020 Vice President of Licensing Executives Society
JAPAN (up to the present)

Ms. Tomomi Fujita is involved in management of law ﬁrm Innoventier as a Partner whileserving as Vice President of the Licensing Executive Society Japan and Assistant Lecturerof Kyoto University Law School. She possesses abundant experience and expertise
regarding corporate law covering intellectual property, business revitalization, M&As, andthe Companies Act. In addition to serving as Outside Director who is an Audit & Supervisory
Committee Member of the Company, she serves as an Outside Auditor for a listed company.

April 1981 Joined The Dai-Ichi Kangyo Bank, Ltd. (currently Mizuho Bank, Ltd.)
September 2000 Deputy General Manager of Singapore Branch, The Dai-Ichi Kangyo Bank, Ltd.
April 2002 Deputy General Manager of Singapore Branch,
Mizuho Corporate Bank, Ltd. (currently Mizuho Bank, Ltd.)
November 2004 Associate Director of International Administration
Department, Mizuho Corporate Bank, Ltd.
April 2005 General Manager of Yokohama Sales Department,
Mizuho Corporate Bank, Ltd.
April 2008 General Manager of International Sales Promotion
Department, Mizuho Corporate Bank, Ltd.
April 2010 Deputy Director of Human Resources Management
Department, Mizuho Corporate Bank, Ltd.
July 2010 Deputy Director of Corporate Planning Department,
Mizuho Financial Group, Inc.
Seconded to Mizuho Research Institute Ltd., Senior ExecutiveOﬃcer; General Manager of Education Business Department
November 2010 Senior Executive Oﬃcer; General Manager of Education
Business Department, Mizuho Research Institute Ltd.
May 2011 Left Mizuho Research Institute Ltd.
June 2011 Director of KANEMATSU CORPORATION
June 2014 Managing Executive Oﬃcer of KANEMATSU CORPORATION
June 2019 Resigned from KANEMATSU CORPORATION
June 2019 Standing Auditor, Yushu Building Co., Ltd. (currently Yushu Corporation Ltd.)
June 2020 Director (Audit & Supervisory Committee Member) of
the Company (up to the present)
June 2020 President, Yushu Corporation Ltd. (up to the present)

Mr. Tetsuya Kaneko has served as Director and Managing Executive Oﬃcer at a global
company, KANEMATSU CORPORATION, for many years. He possesses abundant
experience and knowledge on corporate management, as well as knowledge on overseas
business from his abundant experience working overseas while he was serving at The
Dai-Ichi Kangyo Bank, Ltd. (currently Mizuho Bank, Ltd.).

October 1985 Joined Showa Ota & Co. (currently Ernst & Young
ShinNihon LLC)
July 2001 Partner, Showa Ota & Co.
July 2008 Senior Partner, Showa Ota & Co.
June 2014 Resigned, Showa Ota & Co.
July 2014 Representative, Ito Certiﬁed Public Accountant
Oﬃce (up to the present)
March 2015 Outside Director, NAIGAI TRANS LINE LTD.
(up to the present)
June 2020 Director (Audit & Supervisory Committee Member)of the Company (up to the present)

Mr. Yoshiaki Ito has engaged in audit business, IPO support and consulting business,
etc., for listed companies for many years while he was serving at Showa Ota & Co.
(currently Ernst & Young ShinNihon LLC). After serving as Senior Partner at Showa
Ota & Co., he has been also serving as Outside Director of a listed company for many
years, and possesses abundant experience and expert knowledge on ﬁnance andaccounting as well as abundant experience and knowledge on audit and supervision.

Executive Oﬃcers

Ryoji Tani

Norito Uchiyama

Managing Executive Oﬃcer
Executive Manager,
Construction Center

Managing Executive Oﬃcer
Executive Manager,
Engineering Center

Mitsuaki Adachi

Akira Taguchi

Managing Executive Oﬃcer
Executive Manager,
Energy Plant Div.

Managing Executive Oﬃcer
Executive Manager,
Technology Center

Hidetoshi Tomita

Norio Maeda

Executive Oﬃcer
Executive Manager,
Environmental Plant Div.

Executive Oﬃcer
Executive Manager,
Project Center

Keiji Nakamura

Yasushi Enomoto

Executive Oﬃcer
Deputy Executive Manager,
Construction Center

Executive Oﬃcer
Executive Manager,
Compliance & CSR Promotion Div.

Kiyoshi Shibata
Executive Oﬃcer
Deputy Executive Manager,
Engineering Center

TAKUMA 2021 ANNUAL REPORT

42

Section 02

Corporate Governance

Strengthening risk management

IR Activities

Risk management structure

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 a part of this, we provide notiﬁcations on the convening of General Meetings ofShareholders, balance sheet information, timely disclosure information, marketable securities reports, shareholders reports,
annual reports in English and other business information, all on our website.

We consider it necessary to eﬀectively
address risks that could interfere with thegroup's achievement of its business goals sothat we can safeguard and steadily increase
our corporate value over the long term.
Takuma follows a Risk Management
Policy that connects company-wide risks andseparately classiﬁes them into project risks
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 othercorporate business activities.
Group companies also work to develop andstrengthen approaches to risk management
through the Takuma Group Coordinating
Committee for Compliance & CSR Promotion.

Risk Management Policy【Takuma website > IR information】
https://www.takuma.co.jp/english/investor/index.html[Basic purpose of risk management]

Risk refers to all phenomena that interfere with the Group s ability toachieve its business objectives or cause losses or harm to the interests ofstakeholders.
The Takuma Group practices risk management with the goal of increasing
its corporate value by working to maximize returns while minimizing thenegative impacts of risk.

■Distribution by shareholder type(as of March 31, 2021)■Individuals, others[Risk management action guidelines]

6,985,000 shares

1. The president and CEO is responsible for risk management at Takuma.

8.4%■Treasury stock
1,780,000 shares

2.2 %2. All oﬃcers and employees participate in risk management activities.
3. Risk management activities are carried out in accordance with applicableguidelines such as the Risk Management Rules.

■Corporations in Japan
15,435,000 shares

4. Risk management activities are carried out in line with the Medium-Term
Management Plan and annual plan, and we work to make improvements on
an ongoing basis.

18.6 %■Financial institutions andstock brokerages
35,123,000 shares

5. When risk manifests itself, we respond by taking responsible action quickly
to minimize any damage and creating provisional organizational entities asnecessary.

■Foreign individuals

42.3%

23,674,000 shares

6. Group companies carry out risk management activities in accordance with
their own policies and plans, with support from Takuma.

28.5%

Stock Information
Business continuity plan (BCP)
In addition to formulating a BusinessContinuity Plan based on the policies listed
to the right to ensure proper and appropriate
continuity of business operations in the eventof a large-scale disaster, pandemic, or otheremergency, Takuma conducts disasterprevention exercise and other training on aregular basis.

1. Total number of authorized shares: 321,840,000
2. Total number of outstanding shares: 83,000,000
3. Total number of shareholders: 6,335 (as of March 31, 2021)
4. Major shareholders (top 10)

1. In addition to implementing disaster-related measures to secure the safety ofcorporate oﬃcers and employees, maintain structures so as to enable
continuity of business operations while minimizing damage in an emergency.

Shareholder

2. Strive to respond to customer needs and recover from damage quickly byworking closely with suppliers and partner companies to maintain business
operations.
3. Earn the trust of numerous stakeholders, including employees, theirfamilies, shareholders, and nearby residents, and fulﬁll social needs bymaintaining business operations.

Ensuring compliance
Compliance & CSR promotion structure

43

Board of Directors

President

Committee of Executive Oﬃcers

Compliance & CSR Promotion Organization
Chairman(Executive Manager of the Compliance & CSR Promotion Division)

Divisions and centers
Compliance & CSR Promotion
Administrator (division or center manager)
Department
Compliance & CSR Promoters (department manager)
Enlightenment/education
Staﬀ members
Compliance & CSR promotion structure

Takuma Group

Secretariat (CSR Department)

Coordinating Committee for Compliance & CSR Promotion

Takuma works to promote compliance and CSR through theCompliance & CSR Promotion Organization, which was established inorder to spread awareness of compliance and CSR issues among
employees. This organization is composed of a chairman (theExecutive Manager of the Compliance & CSR Promotion Division), a
secretariat (positioned in the CSR Department), and an executingorganization in each division, center, and department. As the person
in charge of promoting compliance and CSR in his or her division,
each division or center manager is appointed as a Compliance andCSR Promotion Administrator. As persons who implement
enlightenment and education in compliance and CSR in theirrespective departments, department managers are appointed as
Compliance and CSR Promoters. The initiative includes an annual
regular meeting at which Compliance & CSR Promotion Administrators
discuss the state of compliance and CSR promotion throughout thecompany as well as quarterly departmental meetings at which
Compliance & CSR Promoters are given training to help them better
carry out related activities in their departments. Additionally, weestablished the Takuma Group Coordinating Committee forCompliance & CSR Promotion, which brings together representativesof group companies to help ensure that compliance and risk
management are implemented throughout the group.

(as of March 31, 2021)

Number of shares

Shareholding
ratio (%)

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

8,445,000

10.4

Custody Bank of Japan, Ltd. (Trust Account)

5,919,000

7.3

Mizuho Trust & Banking Co., Ltd.
(Retirement Beneﬁts Trust, Mizuho Bank, Ltd. Account)
Custody Bank of Japan, Ltd. (Re-entrustment)

4,022,000

5.0

Nippon Life Insurance Company

3,593,000

4.4

HIKARI TSUSHIN, INC.

3,091,000

3.8

JP MORGAN CHASE BANK 380072

2,120,000

2.6

JP MORGAN CHASE BANK 385632

1,796,000

2.2

TAKUMA CO., LTD. Kyoueikai

1,785,000

2.2

Sumitomo Mitsui Banking Corporation

1,621,000

2.0

CEP UK-THREADNEEDLE INVESTMENTFUNDS ICVC-JAPAN FUND

1,520,000

1.9

5. Dividend Policy
Takuma returns proﬁts to investors in line with a comprehensive assessment of business performance and other factors based on a policyof maintaining stable dividends while working to enhance the quality of its business. Our overriding goal is to 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 18 yen per share, which, combined with
the interim dividend, brought the annual dividend to 36 yen per share.
We plan to continue to build internal reserves to strengthen our ﬁnancial foundation and to use funds to increase corporate value throughcapital investment, R&D investment, and other avenues in order to lay the groundwork for the future growth and expansion of our businesses.

TAKUMA 2021 ANNUAL REPORT

44

Section 03

Financial Information

Status of Business Activities
1. Management Analysis of Financial Position, Business Performance, and Cash Flows
This section provides an overview of the Group s ﬁnancial position, business performance, and cash ﬂows during theconsolidated ﬁscal year under review, along with explanations of the signiﬁcance of that information and the Group s
analysis and study of it from the perspective of management.
Forward-looking statements in the text reﬂect the judgment of management as of the end of the consolidated ﬁscal
year under review.

1

Financial
Information

Business Performance

Orders received during the consolidated ﬁscal year under review totaled 188,563 million yen, exceeding our target atthe beginning of the year (180,000 million yen), thanks to reliable conversion of continued robust demand centering on
waste treatment plants into orders.
Sales rose 12,273 million yen from the previous year to 146,727 million yen on steady progress in the construction ofordered plants. As a result, the order backlog rose 41,837 million yen to 387,152 million yen.
Operating income rose 873 million yen from the previous year to 10,474 million yen thanks to increased sales, while
ordinary proﬁt rose 728 million yen to 11,029 million yen. Proﬁt attributable to owners of parent rose 84 million yen to7,529 million yen.
While uncertainty about the future caused by the COVID-19 pandemic had some impact, for example by weighing on
capital investment appetite and spurring delays in plans, performance remained robust overall, and no serious eﬀects
materialized.
Performance by segment during the consolidated ﬁscal year under review was as follows.
(Unit: Millions of yen)

Change from previous
consolidated ﬁscal year

Consolidated ﬁscal year under review
Segment

OrdersreceivedSales
amountOperatingincomeBacklog

OrdersreceivedSales
amountOperatingincomeDomestic Environment and Energy Plant Business

160,591

120,771

11,475377,143

37,437

12,647856

Overseas Environment and Energy Plant Business

883

1,189

(141)

427

(468)

45

62

Package Boiler Business

17,524

16,932

641

4,521

(401)

(937)

(326)

Equipment and Systems Business

10,166

8,271

877

5,348

3,376

431

492

189,165

147,163

12,852

387,441

39,944

12,186

1,084

(601)

(435)

(2,378)

(288)

(210)

86

(211)

188,563

146,727

10,474

387,152

39,733

12,273873

Subtotal
Adjustments
Total

The Group s operating segments consist of the following four businesses, of which the ﬂagship Domestic Environment
and Energy Plant segment accounts for most net sales: Domestic Environment and Energy Plant, Overseas Environment
and Energy Plant, Package Boiler, and Equipment and Systems business. (During the consolidated ﬁscal year underreview, Domestic Environment and Energy Plant segment accounted for about 80% of total net sales before excludinginter-segment sales and about 90% of total operating income before excluding adjustments.)

45

TAKUMA 2021 ANNUAL REPORT

46

Section 03

Domestic Environment and Energy Plant Business
During the consolidated ﬁscal year under review, eﬀorts to take advantage of continued robust demand yielded fourorders for new construction, including a waste treatment plant DBO project (encompassing construction and operation);
two primary equipment improvement projects; one long-term O&M project; two biomass power plant construction projects;
and one sewage sludge incineration power plant construction project. While some contracts were canceled when theunderlying plans were halted, order volume rose 37,437 million yen from the previous year to 160,591 million yen.
At the same time, sales rose 12,647 million yen to 120,771 million yen on steady progress in the construction ofordered plants. As a result, the order backlog stood at 377,143 million yen as of the end of the year, and DBO, O&M, andother long-term operation projects accounted for about 50% of that ﬁgure.
Operating income rose 856 million yen to 11,475 million yen as sales stemming from steady progress on construction
projects and cost reductions overcame transfer of allowances for loss on sales contracts for some ongoing projects.
In addition to continuing to work to maintain and expand our position as a leading company by securing orders for
waste treatment plants, biomass power plants, and sewage sludge incineration power plants, we will work to expand ourafter-sales service business, for example by improving quality and strengthening proﬁtability in our operations business,
pursuing service life extension and solution proposals, and expanding our power retail business.

2

During the consolidated ﬁscal year under review, order volume fell 468 million yen to 883 million yen as orders for
new plants failed to materialize due to delays in planned projects and other factors.
That said, sales remained on par with the previous year at 1,189 million yen thanks to progress made on previously
ordered bagasse-ﬁred boiler plants, while operating income improved 62 million yen to yield an operating loss of 141
million yen.
In addition to working to increase added value by enhancing after-sales service so that we can capture biomass power
plant orders on an ongoing basis and pursuing additional cost savings, we will continue to work to build structures for
capturing orders for Energy from Waste plants.

Financial Position

Total assets as of the end of the consolidated ﬁscal year under review rose 14,243 million yen from the end of theprevious consolidated ﬁscal year to 177,742 million yen. Principal factors included an increase in notes and accounts
receivable trade of 10,773 million yen.
Liabilities rose 8,728 million yen from the end of the previous consolidated ﬁscal year to 87,187 million yen.
Principal factors included an increase in short-term loans payable and current portion of long-term debt 5,052 million yen.
Net assets rose 5,515 million yen from the end of the previous consolidated ﬁscal year to 90,555 million yen. Principal
factors included an increase in retained earnings of 4,607 million yen due to posted proﬁt attributable to owners of parent.
As a result, the capital adequacy ratio at the end of the consolidated ﬁscal year under review fell 1.1 points from the endof the previous year to 50.7%, while net assets per share rose 66.72 yen from the end of the previous year to 1,109.87 yen.
The COVID-19 pandemic did not have a substantial impact on the Company s ﬁnancial position during the end of theconsolidated ﬁscal year under review.

3
Overseas Environment and Energy Plant Business

Financial Information

Status of Cash Flow

Cash and cash equivalents at the end of the consolidated ﬁscal year under review fell 1,795 million yen from the end of
the previous consolidated ﬁscal year to 42,958 million yen.
Cash Flows from Operating Activities
Net cash used in operating activities totaled 1,681 million yen (compared to net cash used in operating activities of
11,733 million yen during the previous consolidated ﬁscal year). Principal factors included income before income taxes of
10,701 million yen, which was oﬀset by a decrease in accounts receivable and advances received of 11,551 million yen.
Cash Flows from Investing Activities

Package Boiler Business
Orders received during the consolidated ﬁscal year under review fell 401 million yen to 17,524 million yen as factors
including a decline in capital investment appetite stemming from future uncertainty created by the COVID-19 pandemic
oﬀset continued initiatives to tap new demand and secure maintenance orders. Sales fell 937 million yen to 16,932
million yen, while operating income fell 326 million yen to 641 million yen.
We will continue to maintain and expand the domestic business with a focus on replacement demand andmaintenance while striving to expand the overseas business through eﬀorts centered on our local subsidiary in Thailand.
Additionally, we will work to develop new heat source system markets anticipating the decarbonized society of the
future, including hybrid systems that combine heat pumps with boilers and hot water heaters as well as wood chipfueledbiomass boilers.
Equipment and Systems Business
Orders received during the consolidated ﬁscal year under review rose 3,376 million yen to 10,166 million yen as anincrease in orders for semiconductor industry equipment and air puriﬁcation equipment augmented robust order volume
in the building equipment business.
Reﬂecting the increase in orders, sales rose 431 million yen to 8,271 million yen, while operating income rose 492
million yen to 877 million yen.
Going forward, we will work to expand orders in the building equipment business by strengthening our sales andconstruction capabilities and to increase proﬁt, and we will work to strengthen the product competitiveness of oursemiconductor industry equipment.
The Group has worked hard to implement its 12th Medium-Term Management Plan, which ended with the consolidated
ﬁscal year under review. As a result of those eﬀorts, cumulative consolidated ordinary proﬁt during the three-year period
covered by the plan totaled 33.6 billion yen, exceeding the target of 33.0 billion yen.
The 13 th Medium-Term Management Plan, which covers FY2021 to FY2023 and which began this April, hasestablished a cumulative consolidated ordinary proﬁt target of 36.0 billion yen for its three-year period. The COVID-19
pandemic has not yet had a substantial impact on the Group s performance, and we will do our utmost to achieve thetargets set forth in the Medium-Term Management Plan. That said, potential eﬀects in the event of a worsening of thepandemic include fewer new orders as demand slows and new orders are delayed, as well as lower sales as delivery of
existing orders is delayed.

47

Net cash used in investing activities totaled 2,054 million yen (compared to net cash used in investing activities of 202
million yen during the previous consolidated ﬁscal year). Principal factors included income from the sale of investment
securities of 1,870 million yen, which was oﬀset by expenditures on purchases of property, plant and equipment of 2,288
million yen and expenditures on purchases of investment securities of 1,428 million yen.
Cash Flows from Financing Activities
Net cash provided by ﬁnancing activities totaled 1,903 million yen (compared to net cash used in ﬁnancing activitiesof 4,350 million yen during the previous consolidated ﬁscal year). Principal factors included a net increase in short-termborrowing of 4,950 million yen, which oﬀset dividend payments of 2,922 million yen.
The Takuma Group obtains working capital as well as funds for use in capital investment and research anddevelopment to expand its businesses in the future from group funds, advances from customers, and lending fromﬁnancial institutions. Going forward, we do not expect to encounter diﬃculty in procuring the funds necessary to pursue
our business activities. We have established commitment line agreements with multiple ﬁnancial institutions tocomplement liquidity in preparation for unexpected contingencies such as the COVID-19 pandemic.

TAKUMA 2021 ANNUAL REPORT

48

Section 03

4③ Sales

Production Output, Orders Received and Sales

The following table summarizes the Group s sales results during the consolidated ﬁscal year under review by business segment:① Production Results
The following table summarizes the Group s production results during the consolidated ﬁscal year under review by business segment:

Segment

Sales amount (millions of yen)

Year-on-year (%)

Segment

Production output (millions of yen)

Year-on-year (%)

Domestic Environment and Energy Plant Business

120,771

11.7

Domestic Environment and Energy Plant Business

89,48313.0

Overseas Environment and Energy Plant Business

1,189

4.0

Overseas Environment and Energy Plant Business

713(23.5)

Package Boiler Business

16,932(5.2)

Package Boiler Business

11,432(4.1)

Equipment and Systems Business

8,271

5.5

Equipment and Systems Business

6,277

(0.2)

147,163

9.0

107,906

9.7

(436)

(16.5)(381)(11.9)

146,727

9.1

107,524

9.8

SubtotalInter-segment transactions
Total

SubtotalInter-segment transactions
Total

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

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

5② Orders Received
The following table summarizes orders received by the Group during the consolidated ﬁscal year under review by business segment:
Segment

Orders received(millions of yen)

Year-on-year(%)

Backlog(millions of yen)

Year-on-year(%)

Domestic Environment and Energy Plant Business

160,59130.4

377,143

11.8

Overseas Environment and Energy Plant Business

883(34.6)

427(41.7)

Package Boiler Business

17,524

(2.2)

4,521

15.1

Equipment and Systems Business

10,166

49.7

5,348

54.9

189,16526.8

387,441

12.2

(601)

54.0

(288)

136.2

188,56326.7

387,152

12.1

SubtotalInter-segment transactions
Total

Financial Information

Important accounting estimates and underlying assumptions

The Group s consolidated ﬁnancial statements are prepared in accordance with accounting standards that are
generally recognized as fair and appropriate in Japan. More information is available in 2. Summary of signiﬁcantaccounting policies under Notes to Consolidated Financial Statements. When estimates are necessary, managers
make reasonable judgments that take into account past performance and other factors. However, actual performance
may diﬀer from these estimates due to the uncertainty inherent in the estimation process. The factors and phenomena
described below could have a material impact on the Group s consolidated ﬁnancial statements.
More information about the Group s approach to the impact of the COVID-19 pandemic as it applies to accounting
estimates can be found in 6. Additional information under Notes to Consolidated Financial Statements.
① Allowance for losses on construction contracts② Deferred tax assets

Note:
1. Amounts do not include consumption tax or other taxes.
2. Package Boiler Business 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.

49

TAKUMA 2021 ANNUAL REPORT

50

Section 03

2. Contracts of Major Importance in the Group s Business
1

1

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
Until December 2038
(Sweden)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 was entered into.

2

Technology Out-licensing Contracts

Contractee

Contract target

Contract date

Name of other party

Contract term

Takuma Co., Ltd.

N-type palm wastes ﬁred
water-tube boiler

September 1982

P.T. Super Andalas Steel(Indonesia)

For 15 years, then automaticallyrenewed every year

Takuma Co., Ltd.

Auxiliary agent for ﬁlter-type
dust collector

July 1993

MITSUI MINING & SMELTING
CO., LTD. (Japan)

For 10 years, then automaticallyrenewed every year

Takuma Co., Ltd.

Dust elimination technology in exhaustgas treatment systems using impulse waves

November 2005

Nihon Spindle ManufacturingCo., Ltd. (Japan)

For 10 years, then automaticallyrenewed every year

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

3. Research and Development Activities
Having established a corporate vision of growing in a sustained way together with customers and society through thepractice of ESG management and being an indispensable presence in society as a leading company in the areas ofrenewable energy use and environmental protection, the Takuma Group is pursuing research and development to realize
a sustainable society.
The Takuma Group has consolidated its technology-related departments into the Engineering Group, through which itis actively 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, universities, and private-sector companies.
Expenditures on research and development during the consolidated ﬁscal year under review totaled 1,047 million yen.
Principal research and development activities by business segment were as follows:51

Financial Information

Environment and Energy Plant Business① In the area of waste treatment, we continue to utilize a multipurpose demonstration incinerator with a stoker at one of
our plants to develop such aspects of equipment operation as the reduction of harmful substances (e.g., nitrogenoxides, acidic gases, and dioxins) through combustion improvements and increases in power generation eﬃciency
with the principal goal of developing proprietary technology to aid in reducing life cycle cost and boosting energy
recovery. In addition to developing pressure wave boiler dust removal equipment that oﬀers advantages in terms ofenergy recovery compared to conventional steam-type soot blowers, we re conducting research and development into
technologies related to the separation, recovery, and use of carbon dioxide in ﬂue gas. We are working to stabilize
combustion and to develop technologies for remote monitoring using AI and the IoT, for example by utilizing, a comprehensive support system for operation, maintenance, and management that enables integrated
use of a range of data that facilities previously managed and evaluated independently. We re working to enhance thefunctionality and services oﬀered byat the Solution Lab, and we will strive to utilize AI and the IoT to help
accomplish eﬃcient facility operation that is safer and more secure in the future.
② In the area of energy, we continue to develop constituent technologies for burning a variety of biomass fuels including
unutilized wood biomass to generate power, an area in which we are receiving many inquiries in connection withJapan s feed-in tariﬀ program for power generated from renewable sources.
③ In the area of water treatment, we continued to develop a sewage sludge incineration and power generation system
as well as technologies related to a new system for eliminating nitrogen by means of the anammox process. We'realso developing improvements for upﬂow moving-bed sand ﬁltration systems.
The research and development budget for this segment of our business was 915 million yen.
In a sign of the high regard with which the products of the Environment and Energy Plant Business, the t-CarVecarbon dioxide supply system we delivered received the Japan Machinery Federation Chairman Prize at the Federation's
2020 Equipment and System Awards for Excellence in Energy Savings in March 2021. The system removes harmful
components from combustion ﬂue gas generated by a biomass power plant and supplies large volumes of safe,
economical carbon dioxide. The system helps reduce carbon dioxide emissions by allowing carbon-neutral carbon
dioxide to be used eﬀectively in vegetable cultivation. Going forward, we will continue to develop technologies to help
realize a sustainable society.

2

Package Boiler BusinessWe developed and launched the EQR(H)-500KM/AM/NM/LM (gas- and oil-ﬁred) models with 500 kg/h classequivalent evaporation performance as part of our EQOS LINKS series of simple boilers that support linked installation.
The EQRH uses a new economizer to realize even higher eﬃciency, and gas-ﬁred variants have received L2-Techcertiﬁcation from the Ministry of the Environment.
We began selling wood chip-fueled biomass boilers that D'Alessandro Thermomeccanica S.R.L. manufactures.
The research and development budget for this segment of our business was 66 million yen.

3

Equipment and Systems BusinessIn washing systems for semiconductor plants, we continue to participate in a joint research project with a university todevelop products that utilize micro-bubble washing technology that boosts washing eﬀectiveness with ﬁne bubbles while
reducing cleaning agent use. This development program includes assessing basic properties and using the university s
facilities to conduct detailed analysis and evaluation. We will continue to pursue joint research with a university intoozone nano-bubble water sterilization technology in an eﬀort to bring micro-bubble generation technology to applications
in ﬁelds other than the semiconductor and electronics industries.
In the area of chemical ﬁlters for clean rooms at semiconductor plants, we are developing ﬁlters that will deliveradvanced functionality and longer service life.
Going forward, we will continue to improve our washing systems and chemical ﬁlters as we work to develop productsthat meet customer needs.
The research and development budget for this segment of our business was 64 million yen.

TAKUMA 2021 ANNUAL REPORT

52

Section 03

Financial Information

Financial Statement
Consolidated Balance Sheets
TAKUMA CO., LTD. and Consolidated Subsidiaries
As of March 31, 2021 and 2020
Thousands of
U.S. dollars(Note 1)Millions of yen

Cash and time deposits (Notes 7 and 9)

2020

2021

ASSETS
Current assets:¥

44,422¥2021

46,145$401,248

Notes and accounts receivable (Note 9):

Millions of yen

Short-term loans payable (Notes 9 and 12)

83,80773,034756,997

545

556

4,923

Unconsolidated subsidiaries

¥

Other

746

785

6,741

Less allowance for doubtful accounts

(16)

(20)

(146)

5,420

¥

2021

470

$

48,957

182

80

1,646

43,64843,708394,254

Notes and accounts payable (Note 9):
Trade

and aﬃliated companies

2020

2021

LIABILITIES AND NET ASSETS
Current liabilities:
Current portion of long-term debt (Notes 9 and 12)

Trade

Thousands of
U.S. dollars(Note 1)

Unconsolidated subsidiaries
and aﬃliated companies
Other

307

301

2,775

2,525

1,493

22,810Total

85,08274,355

768,515

Total

46,48045,502419,839

Inventories (Note 8)

4,466

4,681

40,335

Accrued income taxes

2,569

1,673

23,205

Other

1,087

1,787

9,815

Advances received

9,349

10,02984,446135,057

126,968

1,219,913

67

165

603

Allowance for losses on sales contracts

3,946

3,401

35,647

Provision for loss on liquidation of subsidiaries and associates

1,004

833

9,065

Other

7,140

5,429

64,49076,157

67,582

687,898

Total current assets
Property, plant and equipment:
Land

2,502

2,497

22,598

Buildings and structures

13,60911,955

122,926

9,797

10,11488,496

Machinery, equipment, ｌease assets and construction in progress
Less accumulated depreciation
Total property, plant and equipment

25,90824,566

234,020(16,148)(16,146)(145,862)

9,760

8,420

88,158

Allowance for guarantees on completed work

Total current liabilities
Long-term liabilities:
Long-term debt (Notes 9 and 12)

80

262

723

Allowance for directors and executive oﬃcers retirement beneﬁts

242

220

2,183

10,451

10,111

94,403

257

283

2,314

Total long-term liabilities

11,03010,876

99,623

Total liabilities

87,18778,458787,521

13,367

13,367

120,743

Net deﬁned beneﬁt liability (Note 13)
Investments and other assets:

Other

Investment securities (Notes 9, 10 and 11)

15,072

13,815

136,142

Investments in:Contingent liabilities (Note 14)

Unconsolidated subsidiaries
3,002

2,112

27,117

Other

7,367

5,433

66,539Net assets (Note 15):

Less allowance for doubtful accounts

(142)

(109)

(1,284)

Common stock

10,227

7,436

92,372and aﬃliated companies

Total

7,311

6,529

66,034

Net deﬁned beneﬁt asset

48

54

435

Other

267

276

2,417

32,925

28,110297,400

Deferred tax assets (Note 18)

Total investments and other assets

Authorized: 321,840,000 shares
Issued: 83,000,000 shares
Capital surplus

3,841

3,818

34,694Retained earnings

70,851

66,244

639,963

Treasury stock, at cost

(2,088)(2,178)(18,859)

Total shareholders' equity

85,971

81,251

776,541

Unrealized gains on securities

4,462

3,764

40,300

Deferred gains and losses on hedges

36

4

326

Foreign currency translation adjustments

30

(3)

272

Remeasurements of deﬁned beneﬁt plans

(356)

(373)

(3,213)

Total accumulated other comprehensive income

4,172

3,392

37,685

Non-controlling interests in consolidated subsidiaries

412

397

3,724

90,55585,040817,950

163,498$ 1,605,471

1,780,446 shares in 2021 and
1,857,894 shares in 2020
Total assets¥

177,742¥

163,498$ 1,605,471

Total net assets
Total liabilities and net assets¥

177,742¥

See accompanying notes.

53

TAKUMA 2021 ANNUAL REPORT

54

Section 03

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income

TAKUMA CO., LTD. and Consolidated Subsidiaries
For tｈe years ended Marcｈ 31, 2021 and 2020

TAKUMA CO., LTD. and Consolidated Subsidiaries
For tｈe years ended Marcｈ 31, 2021 and 2020
Thousands of
U.S. dollars(Note 1)Millions of yen
2020

2021
Net sales (Note 20)¥

Cost of sales (Notes 13, 16, 17 and 20)
Gross proﬁt
Selling, general and administrative expenses (Notes 13, 17 and 20)
Operating income (Note 20)

146,727$ 1,325,326

119,927

108,592

1,083,258

26,80025,862242,068

Unrealized losses on securities

697(1,625)

16,326

16,262

147,467

Deferred gains and losses on hedges

32

(5)

292

10,4749,600

94,601

Foreign currency translation adjustments

44

5

395

Remeasurements of deﬁned beneﬁt plans

18

89

160

457

485

4,130

(15)

(17)

(134)

Proﬁt

¥

1,504

710

13,582

(850)

(565)

(7,675)

Owners of the parent

Provision for loss on liquidation of subsidiaries and associates

(882)

-

(7,969)Non-controlling interests

-

(214)

-

Commitment fee

(29)

(29)

(258)

Loss on disposal of property, plant and equipment

(149)

(53)

(1,343)

Provision for doubtful accounts

(48)

-

(436)

Equity in earnings of aﬃliated companies

218

222

1,973

Other, net

21

(0)

182

227

539

2,052

10,701

10,13996,653Current

4,269

3,891

38,562

Deferred(1,122)(1,169)(10,138)

3,147

2,722

28,424

7,554

68,2297,417$

68,229
6,300

7,147

(1,536)

¥

8,345

¥

5,881

$

75,376

¥

8,309

¥

5,907

$

75,053Comprehensive income attributed to:
36

323

(26)

Consolidated Statements of Changes in Net Assets
TAKUMA CO., LTD. and Consolidated Subsidiaries
For tｈe years ended Marcｈ 31, 2021 and 2020
Total
NonForeign
Deferredcurrency Remeasure- accumulated controlling
Total
Unrealized gains and translation ments ofTreasury
otherinterests in
Common Capital Retained stock, shareholders' gains on losses ondeﬁned comprehensive consolidated
adjuststock
surplus earnings at costequitysecurities
hedgessubsidiaries
ments beneﬁt plans income

For the years ended March 31, 2021

Proﬁt

7,417

¥

791

Total other comprehensive income
Comprehensive income (Note 19)

Settlement package

Income taxes (Note 18):

7,554

Other comprehensive income：Gain on sales of investment securities (Note 10)

Total income taxes

2021

134,454¥

Interest expense

Income before income taxes

2020

2021

Interest and dividend income

Other income (expenses), net

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

2021

Other income (expenses):

Loss on sales of investment securities

Financial Information

Balance at the beginning of current period

Total
net
assetsMillions of yen¥ 13,367 ¥ 3,818 ¥ 66,244 ¥ (2,178) ¥ 81,251 ¥ 3,764 ¥4 ¥(3) ¥ (373) ¥ 3,392 ¥397 ¥ 85,040

Cash dividends (¥36.00 per share)--(2,922)-(2,922)

-

-

-

-

-

-

(2,922)Proﬁt attributable to owners of parent

-

-

7,529

-

7,529

-

-

-

-

-

-

7,529

Purchase of treasury stock

-

-

-

(1)

(1)

-

-

-

-

-

-

(1)

Disposal of treasury shares

-

23

-

91

114

-

-

-

-

-

-

114

-

-

-

-

-

698

32

33

17

780

15

795

36 ¥

30 ¥ (356) ¥ 4,172 ¥412 ¥ 90,555(4) ¥ (463) ¥ 4,931 ¥391 ¥ 83,088

Other changes during the year, net
Balance at the end of current period¥ 13,367 ¥ 3,841 ¥ 70,851 ¥ (2,088) ¥ 85,971 ¥ 4,462 ¥Proﬁt (loss) attributable to non-controlling interests
in consolidated subsidiaries

25

220

(28)

For the years ended March 31, 2020
Balance at the beginning of current period

Proﬁt attributable to owners of parent

¥

7,529

¥

7,445

$

68,009U.S. dollars(Note 1)yen
Per share:
Net income
Diluted net income
Cash dividends applicable to the year

Millions of yen¥ 13,367 ¥ 3,768 ¥ 60,866 ¥ (235) ¥ 77,766 ¥ 5,390 ¥--(2,068)-(2,068)

-

-

-

-

-

-

Proﬁt attributable to owners of parent

-

-

7,446

-

7,446

-

-

-

-

-

-

7,446

Purchase of treasury stock

-

-

-

(2,000)(2,000)

-

-

-

-

-

-

(2,000)

Disposal of treasury shares

-

50

-

57

107

-

-

-

-

-

-

107

Other changes during the year, net

-

-

-

-

-

(1,626)

(4)

1

90

(1,539)6(1,533)4 ¥(3) ¥ (373) ¥ 3,392 ¥Balance at the end of current period¥ 13,367 ¥ 3,818 ¥ 66,244 ¥ (2,178) ¥ 81,251 ¥ 3,764 ¥

92.73

¥

90.36

$

0.84

-

-

-

36.00

31.00

0.33

Balance at the beginning of current period(2,068)397 ¥ 85,040

Thousands of U.S. dollars (Note 1)

For the years ended March 31, 2021¥

8 ¥Cash dividends (￥25.00 per share)$ 120,743 $ 34,489 $ 598,352 $ (19,677) $ 733,907 $ 34,002 $34 $(23) $ (3,373) $ 30,640 $

3,586 $ 768,133

Cash dividends ($0.33 per share)--(26,398)-(26,398)

-

-

-

-

-

-

(26,398)

Proﬁt attributable to owners of parent--

68,009-68,009

-

-

-

-

-

-

68,009Purchase of treasury stock

-

-

-

(6)

(6)

-

-

-

-

-

-

(6)

Disposal of treasury shares

-

205

-

824

1 ,029

-

-

-

-

-

-

1,029

-

-

-

-

-

6,298

292

295

160

7,045

138

7,183

326 $

272 $ (3,213) $ 37,685 $Other changes during the year, net
Balance at the end of current period$ 120,743 $ 34,694 $ 639,963 $ (18,859) $ 776,541 $ 40,300 $3,724 $ 817,950

See accompanying notes.

55

TAKUMA 2021 ANNUAL REPORT

56

Section 03

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

TAKUMA CO., LTD. and Consolidated Subsidiaries
For tｈe years ended Marcｈ 31, 2021 and 2020

TAKUMA CO., LTD. and Consolidated Subsidiaries
Thousands of
U.S. dollars(Note 1)Millions of yen
2020

2021

2021

Cash ﬂows from operating activities:
Income before income taxes¥

10,701¥

10,139$96,653Adjustments to reconcile income before income taxes
to net cash provided by operating activities:
Depreciation

1,037

917

9,364

Loss (gain) on sales of investment securities(1,504)(496)(13,582)

Gain (loss) on disposal of property, plant and equipment

149

53

1,343

Increase (decrease) in allowance for bonuses

210

183

1,900
4,927

Increase (decrease) in allowance for losses on sales contracts

545

1,662

Increase (decrease) in provision for loss on liquidation of subsidiaries and associates

170

(166)

1,538

Increase (decrease) in net deﬁned beneﬁt liability

366

494

3,306

Interest and dividend income

(457)

(485)

(4,130)

15

17

134

(218)

(222)

(1,973)(11,551)(23,614)(104,338)

215

(312)

1,944

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

238

(529)

2,154

Net increase (decrease) in notes and accounts payable and advance money

539

6,146

4,872

Increase (decrease) in other current liabilities

2,528

(551)

22,834

Other(1,797)250(16,232)

1,186(6,514)

10,714

Interest and dividend received

527

563

4,761

Interest paid

(14)

(19)

(125)

(3,380)(5,763)(30,533)(1,681)(11,733)(15,183)

Subtotal

Income taxes received (paid)
Net cash provided by operating activities
Cash ﬂows from investing activities:
Net decrease (increase) in time deposits

(59)

(650)

(536)

(2,288)(1,520)(20,666)

Sale of property, plant and equipment

46

508

414

Purchase of intangible ﬁxed assets

(67)

(36)

(607)

Purchase of investment securities(1,428)(1,253)(12,902)

Sale of investment securities

1,870

2,621

16,898Disbursement for loans receivable

(50)

(50)

(452)

Collection of loans receivable

140

140

1,262

Purchase of property, plant and equipment

(218)

38

(1,961)(2,054)(202)(18,550)

4,950

(175)

44,711

(80)

(117)

(722)

Purchase of treasury stock(1)(2,000)(6)

Payment of cash dividends(2,922)(2,068)(26,398)

Dividends paid to non-controlling interests

(21)

(24)

(186)

Other

(23)

34

(206)

1,903

(4,350)17,193Other
Net cash used in investing activities
Cash ﬂows from ﬁnancing activities:
Net increase (decrease) in short-term bank loans
Payment of long-term debt

Net cash used in ﬁnancing activities
Eﬀect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents

See accompanying notes.

57

11

322

(16,274)(16,218)

44,753

Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 7)37(1,795)¥42,958404,241

61,027¥44,753$

388,023

1

Financial Information

Basis of presenting ﬁnancial statements

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 withaccounting principles generally accepted in Japan, which are diﬀerent in certain respects as to application anddisclosure requirements from International Financial Reporting Standards.
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 accordancewith Japanese GAAP and ﬁled with the appropriate Local Finance Bureau of the Ministry of Finance as required by theJapanese Financial Instruments and Exchange Law.
Some supplementary information included in the statutory Japanese language consolidated ﬁnancial statements, but notrequired for fair presentation, is not presented in the accompanying consolidated ﬁnancial statements.
The translations of the Japanese yen amounts into U.S. dollar amounts are included solely for the convenience ofreaders outside Japan, using the prevailing exchange rate at March 31, 2021, which was ¥110.71 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 28 signiﬁcant subsidiaries (the Companies ).
Nishichita High Trust Co., Ltd., which was a newly established subsidiary, has been included in the consolidation from theconsolidated ﬁscal year ended March 31, 2021. All signiﬁcant intercompany transactions and unrealized proﬁts among theCompanies 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 thanconsolidated 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
because of 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 isrecognized 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
and short-term investments with maturities not exceeding three months from the date of acquisition and which have high liquidity andlow 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
component of net assets. Realized gains and losses on the sale of such securities are computed at cost using moving average cost.
Available-for-sale securities 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 acorresponding 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
and by applying a percentage based on collection experience to the remaining receivables.

TAKUMA 2021 ANNUAL REPORT

58

Section 03(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
the straight-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 theorder by 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) Provision for loss on liquidation of subsidiaries and associates
To prepare for the loss on liquidation of subsidiaries and associates, a provision is made based on the estimated amounts.
(11) Allowance for directors retirement beneﬁts
Directors are generally entitled to receive retirement beneﬁts based on the Companies internal rules. The Companies provide anallowance for directors retirement beneﬁts based on the amount that would be required if all directors retired at the balance sheet date.
(12) Net deﬁned beneﬁt liability
In calculating retirement beneﬁt obligations, the method of attributing expected beneﬁts to periods employs principally a beneﬁt
formula basis. Actuarial gains and losses are recognized in expenses using the straight-line method principally over 10 years
commencing with the following period. Prior service costs are recognized in expenses using the straight-line method principally over
10 years.
(13) 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.
(14) 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.
Application of tax eﬀect accounting for the transition from the consolidated tax payment system to the group taxation system
Having regard to paragraph 3 of Practical Solution on the Treatment of Tax Eﬀect Accounting for the Transition from theConsolidated Taxation System to the Group Tax Sharing System (PITF No.39, March 31, 2020), the Company and its domestic
consolidated subsidiaries did not follow paragraph 44 of Implementation Guidance on Tax Eﬀect Accounting (ASBJ Guidance No.
28, February 16, 2018) but applied provisions of pre-amended tax laws when calculating the amounts of deferred tax assets andliabilities that relate to transitioning to the group taxation system and related amendments of tax laws for transitioning to the single
tax payment system.
(15) 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 eachperiod. Diluted net income per share is computed with the assumption that all convertible bonds were converted into common stockat the beginning of each period. Cash dividends per share represent interim dividends declared by the Board of Directors during eachyear and year-end dividends approved by the shareholders at the annual meeting held subsequent to the end of the ﬁscal year.
(16) Derivatives and hedge accounting
The Companies generally state derivative ﬁnancial instruments at fair value and recognize changes in the fair value as gains orlosses unless the derivative ﬁnancial instruments are used for hedging purposes. If derivative ﬁnancial instruments are used ashedges and meet certain hedging criteria, the Companies generally defer recognition of gain or loss resulting from a change in thefair value of the derivative 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 remeasured at market value.
(17) Reclassiﬁcations
Certain prior year amounts have been reclassiﬁed to conform to the 2021 presentation.

59

3

Financial Information

Accounting standards issued but not yet adopted

Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan Statement No. 29, March 30, 2020)
Implementation Guidance on Accounting Standard for Revenue Recognition(Accounting Standards Board of Japan Guidance No. 30, March 30, 2020)(1) Overview
This is a comprehensive accounting standard for revenue recognition. Revenue is recognized using the following ﬁve steps.
Step 1: Identify the contract with a customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligations in the contract.
Step 5: Recognize revenue when (or as) the reporting organization satisﬁes a performance obligation.
(2) Eﬀective dateEﬀective from the beginning of the ﬁscal year ending March 31, 2022.
(3) Eﬀects of application of the standard and guidance
There is insigniﬁcant eﬀect on the consolidated ﬁnancial statements.
Accounting Standard for Fair Value Measurement (Accounting Standards Board of Japan Statement No. 30, July 4, 2019)
Accounting Standard for Measurement of Inventories (Accounting Standards Board of Japan Statement No. 9, July 4, 2019)
Accounting Standard for Financial Instruments (Accounting Standards Board of Japan Statement No. 10, July 4, 2019)
Implementation Guidance on Accounting Standard for Fair Value Measurement(Accounting Standards Board of Japan Guidance No. 31, July 4, 2019)
Implementation Guidance on Disclosures of Fair Value of Financial Instruments(Accounting Standards Board of Japan Guidance No. 19, March 31, 2020)(1) Overview
Under the circumstances that IASB and FASB have similar detailed guidance regarding fair value measurements, IFRS
13-Fair Value Measurement-in IFRS and Topic 820 in the Accounting Standards Codiﬁcation-Fair Value Measurement-in U.S.
GAAP, ASBJ has made eﬀorts to make the Japanese standards consistent with international accounting standards mainly
regarding the guidance and disclosure of the fair value of ﬁnancial instruments and has published the standards.
From the viewpoint of improving the comparability of ﬁnancial statements between domestic and overseas companies by usinga uniform calculation method as a basic policy for the development of accounting standards for fair value measurement, ASBJ
has basically adopted all the provisions of IFRS 13 and has stipulated other treatments for individual items to the extent thatcomparability between ﬁnancial statements is not signiﬁcantly impaired considering the practices that have been conducted inJapan up to now.
(2) Eﬀective date
The Company and its consolidated companies plan to adopt the standards from the beginning of the ﬁscal year ending March
31, 2022.
(3) Eﬀects of application of the standard and guidance
There is no eﬀect on the consolidated ﬁnancial statements.

4

Signiﬁcant accounting estimates(Net sales based on the percentage-of-completion method and allowance for losses on sales contracts)(1) Carrying amounts in the current year s ﬁnancial statements
Net sales based on the percentage-of-completion method was amounted to ¥ 40,833 million ($ 368,831 thousand).
Allowance for losses on sales contracts was amounted to ¥ 3,946 million ($ 35,647 thousand).
(2) Information on the nature of signiﬁcant accounting estimates for identiﬁed items
The Takuma Group will proceed with construction work in which certainty of results is recognized for the progress portion until
the end of the current consolidated ﬁscal year and recognize earnings based on our standards. The progress of theconstruction is based on the percentage-of-completion method, and the cost incurred until the end of the current consolidated
ﬁscal year is measured by comparing it with the estimated costs. In addition, in order to prepare for the loss of orderconstruction, the estimated amount of construction costs generated signiﬁcantly exceeds the order amount. Excess amounts
that are expected to occur after the consolidated ﬁscal year are recorded as allowance for losses on sales contracts.
In calculating the estimated cost of construction, information and conditions available as of the end of the current consolidated
ﬁscal year for each individual project (materials and equipment, construction prices, labor costs, speciﬁcations, construction
methods, etc.) are the basis for calculation.
However, after-sales service for various construction and delivery plants provided by the Group, the speciﬁcations, and someperiods from order to delivery and service delivery are long-term. Therefore, changes in the basis of calculations due toconstruction issues and changes in economic conditions will have a signiﬁcant impact on consolidated ﬁnancial statements forthe next consolidated ﬁscal year.
(Deferred tax assets)(1) Carrying amounts in the current year s ﬁnancial statements
Deferred tax assets was amounted to ¥ 7,311 million ($ 66,034 thousand).

TAKUMA 2021 ANNUAL REPORT

60

Section 03(2) Information on the nature of signiﬁcant accounting estimates for identiﬁed items
The Takuma Group reasonably estimates future taxable income based on business plans for deferred tax assets and theamount that is expected to be recoverable.
Each group company determines the classiﬁcation based on accounting standards, and the expected amount recoverable iscalculated based on future taxation within a reasonable estimate period according to the classiﬁcation and the scheduling ofincome and one-time diﬀerence in future subtraction.
However, due to changes in the business environment because of a decrease in demand, etc., the estimated period based on
the classiﬁcation and the estimated amount of future taxable income and deferred tax assets will be increased or reduced,
which will have a material impact on the consolidated ﬁnancial statements for the next consolidated ﬁscal year.

5

Changes in presentation method(Adoption of Accounting Standard for Disclosure of Accounting Estimates )The Company and its subsidiaries adopted ASBJ Statement No. 31 Accounting Standard for Disclosure of Accounting
Estimates (March 31, 2020) to the consolidated ﬁnancial statements for the current consolidated ﬁscal year, andtherefore signiﬁcant accounting estimates are disclosed in the note to the consolidated ﬁnancial statements.
The note does not include information for the prior consolidated ﬁscal year in accordance with the transitional provision
set out in paragraph 11 of the Accounting Standard.

6

To cope with operating receivables and loans exposed to liquidity risk, each Group company prepares monthly cash-ﬂow
plans and enters into loan commitment agreements with several ﬁnancial institutions for raising working capital ﬂexibly andstably.
(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 any diﬀerences between them as of March 31, 2021
and 2020, except items for which 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 shortperiod of time and the fair value is nearly equal to the book value.

As Covid-19 has had no signiﬁcant eﬀect on the consolidated ﬁnancial statements for the year ended March 31, 2021,
it is assumed that there is no signiﬁcant eﬀect on the accounting estimates.
If the virus were to have more inﬂuence on society and economy than ever, the consolidated ﬁnancial statements for the
next ﬁscal year would reﬂect the inﬂuence.

Amounts recognized on the consolidated balance sheets

Thousands of U.S. dollars

Millions of yen
2021
¥

2020

44,422¥

46,1452021$

401,248¥

Total cash and cash equivalents(1,464)¥42,958(13,225)(1,392)¥44,753$

388,023

Inventories

¥

¥

908

2020
¥

1,003

$

8,200

1,886

2,048

17,033

Materials and supplies

1,672

1,630

15,102

¥

4,466

¥

4,681

$

40,335

Financial instruments(1) Status of ﬁnancial instruments(a) Financial instruments policy
Under the Group policy, investments in ﬁnancial instruments are limited primarily to short-term deposits and bank loans forraising 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 operatingreceivables through customer based due dates and other balance controls in accordance with the Companies' regulations.
Investment securities consist mainly of stocks and are periodically checked for the fair value of the listed shares.
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, the 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.

61

¥

¥

84,222¥-401,248401,248$-

Thousands of U.S. dollars

-

2021

73,349$73,349¥-760,747
760,747$-（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.
Thousands of U.S. dollars

Millions of yen
2021
Amounts recognized on the consolidated balance sheets¥

Fair value

2020

14,936¥

14,936¥-2021

13,579$13,579¥-134,913
134,913$-

Thousands of U.S. dollars

Millions of yen

2021

Work-in-process

946,145

2020

84,222Thousands of U.S. dollars

Millions of yen
2021

Total inventories$(Notes and accounts payable)
The fair value of notes and accounts payable is based on the relevant book value because they are mostly settled withina short period of time and the fair value is nearly equal to the book value.

Inventories were summarized as follows:

Merchandise and ﬁnished goods

-

2021

46,145

Millions of yen

Diﬀerence

8

¥

2021

Time deposits with maturities exceeding three months
from the date of acquisition

44,422(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 period of time and the fair value is nearly equal to the book value.

Diﬀerence

Amounts of cash and cash equivalents as of March 31, 2021 and 2020 were reconciled with cash and time deposits as follows:

2020

44,422

Fair value

Cash and cash equivalents

Cash and time deposits¥

Fair value

Amounts recognized on the consolidated balance sheets

7

Thousands of U.S. dollars

Millions of yen
2021

Diﬀerence

Additional information

Financial Information

2021
Amounts recognized on the consolidated balance sheets¥

Fair value
Diﬀerence

2020

30,718¥30,718¥-2021

29,276$29,276¥-

277,459
277,459$-(Electronically recorded obligations)
The fair value of electronically recorded obligations is based on the relevant book value because they are mostly settled
within a short period of time and the fair value is nearly equal to the book value.
Thousands of U.S. dollars

Millions of yen
2021
Amounts recognized on the consolidated balance sheets¥

Fair value
Diﬀerence

2020

13,184¥

13,184¥-2021

14,681$

14,681¥-

119,088
119,088$-(Accrued income taxes)
The fair value of accrued income taxes is based on the relevant book value because they are settled within a shortperiod of time and the fair value is nearly equal to the book value.
Thousands of U.S. dollars

Millions of yen
2021
Amounts recognized on the consolidated balance sheets¥

Fair value
Diﬀerence

2020

2,569

¥

2,569
¥

-

2021

1,673

$

1,673
¥

-

23,20523,205$-

TAKUMA 2021 ANNUAL REPORT

62

Section 03(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 shortperiod of time and the fair value is nearly equal to the book value.
Thousands of U.S. dollars

Millions of yen
2021
Amounts recognized on the consolidated balance sheets¥

Fair value

2020

5,420

¥

¥

2021

470

5,420

Diﬀerence

$

¥

-

2021
Amounts recognized on the consolidated balance sheets¥$

Millions of yen

Fair value¥

Equity securities

262

Diﬀerence

¥

$

¥

1

2021

Equity securities issued by aﬃliates

¥

Other

63

Less than 1 year 1 to 2 years
44,422 ¥¥16,017
67,233
111,655¥

16,017

Short-term loans payable
Long-term debt
Total

¥

As of March 31, 2020
Cash and time deposits
Notes and accounts receivable

Less than 1 year 1 to 2 years
46,145 ¥¥19,63953,573

¥

5,420
182
5,602

99,718

¥
¥

¥

80
80

19,639

Short-term loans payable
Long-term debt
Total

¥

As of March 31, 2021
Cash and time deposits
Notes and accounts receivable

Less than 1 year 1 to 2 years$ 401,248 $
144,679
607,290

Investment securities
Total$ 1,008,538$

Short-term loans payable
Long-term debt
Total

$

$

¥

$

¥

6,686

Equity securities

2,751

2,515

(236)

Debt securities

828

808

(20)

3,579

3,323

(256)

Subtotal
¥

8,506

¥

¥

14,936

6,430

Millions of yen-

As of March 31, 2020

2020

2,669

¥

1,814

2021
$

24,105236

1,229

Acquisition cost

470
80
550

48,957
1,646
50,603

¥
¥

$

182
182

144,679
723
723

Millions of yen
2 to 3 years 3 to 4 years
- ¥
¥
805
167

¥
¥
¥

167
-

¥
¥
¥

805

Book value

Diﬀerence-

Millions of yen
2 to 3 years 3 to 4 years
- ¥
¥
137

¥
¥
¥

137
80
80

¥
¥
¥

-

Thousands of U.S. dollars
2 to 3 years 3 to 4 years
- $
$
7,274
1,504

$
$
$

1,504
-

$
$
$

7,274
-

¥
¥
¥

-

¥
¥
¥

¥
¥
¥

-

¥
¥
¥

800
800
-

800
800
-

4 to 5 years More than 5 years
- $
$
-

$
$
$

-

$
$
$

¥

10,888¥5,858

10,8885,858

Equity securities

2,294

1,899

(395)

Debt securities

828

792

(36)

3,122

2,691

(431)

Securities with book values not exceeding acquisition costs：

¥

8,152

¥

¥

13,5795,427

Thousands of U.S. dollars

4 to 5 years More than 5 years
- ¥
¥
-

5,030
5,030

Total

4 to 5 years More than 5 years
- ¥
¥
-

¥

Subtotal

Subtotal(3) Redemption schedule of monetary assets with contractual maturities and repayment schedule of short-term loans
payable and long-term debt

Investment securities
Total

11,613

6,686

2,369
$

Thousands of U.S. dollars

136

¥

¥

11,613Equity securities

Amounts recognized on the consolidated balance sheets

¥

4,927

Securities with book values exceeding acquisition costs：
Millions of yen

Investment securities
Total

Diﬀerence

4,927

Total

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

As of March 31, 2021
Cash and time deposits
Notes and accounts receivable

Book value

Securities with book values not exceeding acquisition costs：

2,369

343

-

¥

Subtotal

2021

342

Acquisition cost

Securities with book values exceeding acquisition costs：-

Thousands of U.S. dollars
2020

262

(1) Acquisition costs and book values of available-for-sale securities with available fair values as of March 31, 2021 and2020 were as follows:
As of March 31, 2021

48,957(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 a similar new loan.
Short-term ﬁnancing is primarily for operating funds, while long-term debt is for capital investment.
Millions of yen

Securities

48,957470-

10Financial Information

7,226
7,226

As of March 31, 2021

Acquisition cost

Book value

Diﬀerence

Securities with book values exceeding acquisition costs：
Equity securities$

Subtotal

44,505$

104,895$

60,39044,505

104,895

60,390Equity securities

24,84322,714(2,129)Debt securities

7,481

7,304

(177)

32,32430,018(2,306)

Securities with book values not exceeding acquisition costs：

Subtotal
Total$

76,829$134,913$58,084(2) Available-for-sale securities sold for the years ended March 31, 2021 and 2020 were as follows:
Millions of yen
2021
Total sales amount

¥

Gains

11

Thousands of U.S. dollars
2020

1,870

¥

2021

904

1,504

$

710

16,89813,582Pledged assets

The following assets were pledged to secure short-term loans payable, long-term debt, and ｃontingent liabilities underguarantees for bank loans of aﬃliated companies and fulﬁllment of contracts as of March 31, 2021 and 2020:
Millions of yen
2021
Investment securities
Time deposits as construction contract guarantees
Total

¥

Thousands of U.S. dollars
2020

150

¥

2021

150

$

1,355

72

63

650

222

213

2,005

-

TAKUMA 2021 ANNUAL REPORT

64

Section 03

12

Reconciliation from retirement beneﬁt obligations and plan assets to net deﬁned beneﬁt liability as of March 31, 2021
and 2020 was as follows:

Short-term loans payable and long-term debt

Millions of yen
2021

Thousands of U.S. dollars
2020¥

Unsecured

-

¥

2021
-

$

-

5,420

470

48,957

5,420

470

48,957The current portion of long-term debt as of March 31, 2021 and 2020 was as follows:
Millions of yen
2021
SecuredThousands of U.S. dollars
2020

¥

-

Unsecured

¥

2021
-

$

-

182

80

1,646

182

80

1,646

2021
Funded retirement beneﬁt obligations

2020
611

¥

Plan assets

Millions of yen
2021
¥

2020
-

UnsecuredThousands of U.S. dollars

¥

2021
-

$

-

80

262

723

80

262

723

The annual average interest rate applicable to bank loans at March 31, 2021 and 2020 was as follows:

2021

597

¥

(426)

$

5,515
(3,845)

(426)

185

171

1,670

Unfunded retirement beneﬁt obligations

10,2189,886

92,298

Total net deﬁned beneﬁt liability (asset) at March 31, 2021 and 2020

10,403

10,057

93,968Net deﬁned beneﬁt liability

10,451

10,111

94,403(48)(54)

Net deﬁned beneﬁt asset
Total net deﬁned beneﬁt liability (asset) at March 31, 2021 and 2020¥

10,403¥(435)$

10,057

93,968Retirement beneﬁt costs for the years ended March 31, 2021 and 2020 were as follows:
Thousands of U.S. dollars

Millions of yen
2021

Long-term debt as of March 31, 2021 and 2020 was as follows:

SecuredThousands of U.S. dollars

Millions of yen

Short-term loans payable as of March 31, 2021 and 2020 were as follows:

SecuredFinancial Information

Service cost

2020
617

¥

2021

601

¥

$

5,573

Interest cost

51

49

460

Amortization of actuarial diﬀerences

133

138

1,206

Amortization of prior service cost

(2)

(4)

(17)

Retirement beneﬁt costs based on the simpliﬁed method

113

88

1,017

Total retirement beneﬁt costs for the ﬁscal years ended March 31, 2021 and 2020

¥

912

¥

$

872

8,239

Remeasurements of deﬁned beneﬁt plans for the years ended March 31, 2021 and 2020 were as follows:

2021

2020

Short-term loans payable

0.8%

0.8%

Current portion of long-term debt

5.4%

1.0%

Prior service costs

Long-term debt

0.8%

3.3%

Actuarial gains and losses

Thousands of U.S. dollars

Millions of yen
2021

2020
(2)

¥

2021
(4)

¥

28

(17)

$

248

133

Total remeasurements of deﬁned beneﬁt plans for the ﬁscal years ended

13

March 31, 2021 and 2020

Employees' retirement beneﬁts(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.
(2) Deﬁned beneﬁt plans
Movement in retirement beneﬁt obligations (except plans applying the simpliﬁed method) for the years ended March 31,
2021 and 2020 was as follows:
Thousands of U.S. dollars

Millions of yen
2021
Balance at April 1, 2021 and 2020

¥

2020

9,392

¥

$

84,833

617

601

5,573

Interest cost

51

49

460

Actuarial loss (gain)

106

6

958

Beneﬁts paid

(428)

(374)

(3,864)

¥

9,738

¥

9,392

$

87,960Movement in net deﬁned beneﬁt liability of plans applying the simpliﬁed method for the years ended March 31, 2021
and 2020 was as follows:
Thousands of U.S. dollars

Millions of yen
2021
Balance at April 1, 2021 and 2020

¥

665

¥

2021

636

$

6,009

Retirement beneﬁt costs

113

88

1,017

Contributions paid by the employer

(29)

(24)

(262)

Beneﬁts paid

(90)

(37)

(812)

Other
Balance at March 31, 2021 and 2020

65

2020

6
¥

665

665

¥

$

129

231

Thousands of U.S. dollars

Millions of yen
2021
Prior service costs yet to be recognized¥-

Actuarial gains and losses yet to be recognized
Total balance at March 31, 2021 and 2020

2020
¥

(512)
¥

(512)

2021
2

$

(540)
¥

(538)

(4,628)$(4,628)The principal actuarial assumptions at March 31, 2021 and 2020 were as follows:
2021

2020

Discount rate

principally 0.64%

principally 0.64%

Expected rate of salary increase

principally

principally

6.9%

6.8%

(3) Deﬁned contribution plan
The amount of contribution required for the deﬁned contribution plans of the Companies for the years ended March
31, 2021 and 2020 was ¥146 million ($1,315 thousand) and ¥139 million, respectively.

14

Contingent liabilities

The Companies were contingently liable under guarantees for bank loans of aﬃliated companies and other companies
as of March 31, 2021 and 2020 as follows:
Millions of yen
2021
Unsecured¥Thousands of U.S. dollars
2020

149

¥

2021
179

$

1,345

56

2
¥

26

Accumulated remeasurements of deﬁned beneﬁt plans as of March 31, 2021 and 2020 were as follows:

2021

9,110

Service cost

Balance at March 31, 2021 and 2020

¥

$

6,008

TAKUMA 2021 ANNUAL REPORT

66

Section 03

15

Components of the Companies' deferred tax assets and liabilities as of March 31, 2021 and 2020 were as follows:

Net assets

Under Japanese laws and regulations, the entire amount paid for new shares is required to be designated as common
stock. However, a company may, by a resolution of the Board of Directors, designate an amount not exceeding one halfof the price of the new shares as additional paid-in capital, which is included in capital surplus.
Under the Japanese Corporate Law (the Law ), in cases in which a dividend distribution of surplus is made, the smallerof an amount equal 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. Legalearnings 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 becapitalized by a resolution 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 and all legal earnings reserve may be transferred to other capital surplus and retained earnings,
respectively, which are potentially available for dividends.
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.

16

Provision for losses on sales contracts

Provision for losses on sales contracts included in cost of sales for the years ended March 31, 2021 and 2020 was as follows:
Millions of yen
2021
¥

17

Thousands of U.S. dollars
2020

1,807

¥

2,199

2021
$

16,320Research and development expenses

Research and development expenses are charged to income as incurred. Such expenses included in cost of sales andselling, general and administrative expenses for the years ended March 31, 2021 and 2020 were as follows:
Millions of yen
2021
¥

18

1,047

Thousands of U.S. dollars
2020

¥

1,154

2021
$

9,457

Income taxes

The Companies are subject to a number of taxes based on income, which, in the aggregate, indicated a statutory rate inJapan of approximately 30.6% for the years ended March 31, 2020.
And there was no signiﬁcant diﬀerence between the normal eﬀective statutory tax rates and the eﬀecteive tax rates
reﬂected in the accompanying consolidated statements of income for the years ended March 31, 2021.
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.
2020
Statutory tax rate

30.6 %

Nondeductible expenses

2.0

Dividend income(1.4)

Equity in earnings of aﬃliated companies(0.7)

Council tax

0.7

Tax credits(1.8)

Valuation allowance

(4.7)

Other
The Companies' eﬀective tax rate

67

Financial Information

2.1
26.8 %

Deferred tax assets:
Net deﬁned beneﬁt liability
Allowance for doubtful accounts
Accrued cost of sales
Allowance for losses on sales contracts
Other
Total deferred tax assets
Valuation allowance
Net deferred tax assets
Deferred tax liabilities:
Unrealized gains on securities
Other
Total deferred tax liabilities
Net deferred tax assets

19

2021
¥

¥
¥
¥

Millions of yen

3,214
2,104
1,821
1,135
4,173
12,447(2,968)9,479¥(1,955)(236)(2,191)
7,288

¥

¥

¥

Thousands of U.S. dollars
2021

2020
3,084
1,891
1,424
1,036
3,923
11,358(3,040)8,318$(1,649)(176)(1,825)
6,493

$

$

$

29,02819,001
16,44910,252
37,696112,426(26,804)
85,622(17,657)(2,131)(19,788)
65,834Comprehensive income

Amounts reclassiﬁed to net income in the current period that were recognized in other comprehensive income in thecurrent or previous periods and the tax eﬀects for each component of other comprehensive income were as follows:
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

20

2021

Millions of yen

2,506(1,504)
1,002
(305)
697

¥

46
46
(14)
32

¥

44
44
44

¥

¥

¥

(106)
132
26
(8)
18

¥

791

¥

¥
¥

¥
¥

¥
¥

Thousands of U.S. dollars
2021

2020

22,635(13,582)
9,053(2,753)6,300(1,672)(668)(2,340)715(1,625)

$

(7)
(7)
2
(5)

$

5
5
5

$

$

¥

(6)
135
129
(40)
89

$

(958)
1,189
231
(71)
160

¥

(1,536)

$

7,147

¥

¥

¥

$

$

$

420
420
(128)
292
395
395
395

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
reportable segments in accordance with the similarity of products and services of the respective business. The results ofeach reportable segment are reviewed periodically by the Board of Directors to assess the segment's businessperformance.
Domestic Environment and Energy Business
General waste treatment plants, industrial waste treatment plants, waste recycling plants, wastewater treatment plants,
sludge combustion plants and biomass power plants
Overseas Environment and Energy Business
Waste combusting power plants and biomass power plants
Package Boiler BusinessCompact through-ﬂow boilers and vacuum water heating systems
Equipment and System Business
Construction equipment, equipment for semi-conductor industry and cleaning systems

TAKUMA 2021 ANNUAL REPORT

68

Section 03

Financial Information(2) Basis of measurement about reportable segment proﬁt or loss and other material items
Accounting methods used for reportable segments are the same those explained in the Note 2, Summary of signiﬁcantaccounting policies.
Proﬁts of reportable units are operating income. Internal revenue and transfers between reportable segments arerecorded using prevailing market prices.
(3) Information about reportable segment proﬁt or loss and other material items
Reportable segment information for the years ended March 31, 2021 and 2020 was as follows:Year ended March 31, 2021
Sales:
Outside customers
Intersegment
Total
Reportable segment income (loss)
Others:Depreciation

Year ended March 31, 2020
Sales:
Outside customers
Intersegment
Total
Reportable segment income (loss)
Others:Depreciation

Year ended March 31, 2021
Sales:
Outside customers
Intersegment
Total
Reportable segment income (loss)
Others:Depreciation

Domestic
Overseas
Environment and Environment andEnergy Business Energy Business

Domestic
Overseas
Environment and Environment andEnergy Business Energy Business

Domestic
Overseas
Environment and Environment andEnergy Business Energy Business$

74,026683
74,709
7,920

$

1,463

$

186

$
$

41

7,616

$

$

$

152,570368
152,938
5,786

$

$

Consolidated
¥

¥

(522)
(522)
(2,167)¥

134,454
134,454
9,600

¥

6

¥

917

911

Thousands of U.S. dollars
Equipment
PackageandTotal
Boiler Business System Business

10,71720
10,737(1,272)$ 1,088,013
2,862
1,090,875$ 103,651

Adjustment

¥

21

154

5

731

1,037

¥

¥

¥

¥

¥

¥

¥

¥

¥

¥

¥

7

134,454522
134,976
11,767

¥

¥

¥

Total

7,607
233
7,840
384

17,822
47
17,869
966

¥

¥

¥

1,030

Millions of yen
Equipment
PackageandBoiler Business System Business

1,127
16
1,143
(202)

107,898226
108,124
10,619¥¥146,727
146,727
10,474

¥

20

162

5

843

¥

¥

¥

¥

¥

¥

Consolidated

(436)
(436)
(2,378)

¥

¥

¥

¥

¥

Adjustment

146,727
436
147,163
12,852

¥

¥

¥

¥

Total

8,195
76
8,271
877

16,891
41
16,932
641

1,187
2
1,189
(141)

120,454317
120,771
11,475¥

Millions of yen
Equipment
PackageandBoiler Business System Business

Adjustment$ 1,325,326
3,933
1,329,259$ 116,085$$(3,933)(3,933)(21,484)

9,306

$

58

$

Consolidated$ 1,325,326
1,325,326
94,601$$

9,364

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 is adjusted with operating income reported on the Consolidated Statements of Operations.
Disclosure of information related to segment assets is omitted since assets are not allocated to business segments.
(Related information)
Reportable segment information for the years ended March 31, 2021 and 2020 was as follows:(1) Information about products and services
Disclosure of this information is omitted since similar information is disclosed in Note 20, 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.
（Information related to noncurrent asset impairment loss by reportable segment）
Not applicable（Information related to amortization and unamortized balance of goodwill）
Not applicable（Information related to gain on negative goodwill by reportable segment）
Not applicable

69

TAKUMA 2021 ANNUAL REPORT

70

Section 03

71

Financial Information

TAKUMA 2021 ANNUAL REPORT

72

Section 03

73

Financial Information

TAKUMA 2021 ANNUAL REPORT

74

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