This is a transcript of the explanation of Takuma Co., Ltd. that was announced onMay 25, 2022.
＜Speakers＞
Takuma Co., Ltd., the President and Representative Director and CEO, Hiroaki Nanjo
Management Principles

Hiroaki Nanjo: We would like to introduce Takuma. Our company was founded in 1938
by Tsunekichi Takuma, who in 1912 invented Japan's first boiler-based purely on
domestic technology.
Our principle was based on the spirit of "Kikan Hokoku," which means serving society
through boiler manufacturing. Inheriting this idea of "Kikan Hokoku," which also applies
to sustainability today, our group has developed its business activities based on themanagement principle of contributing to the world through the goods and services wecreate. We contribute to society by creating products needed by the world andrecognized as valuable by the world.
Currently, we provide products and services mainly in the fields of environment andenergy, such as municipal solid waste treatment plants, biomass power plants, andwater treatment plants. We believe that our technologies and services are required forthe sustainable development of society.

History

Our company has its roots in the invention of the purely domestic boiler by Tsunekichi
Takuma. And when our company was founded in 1938, we were involved in themanufacture of boilers. As we continued to improve our technology, we developed
combustion technology and water treatment technology. In 1963, we delivered Japan's
first 24 hour operating waste incineration plant.
Since then, we have developed technologies for environmental conservation andenergy utilization and have provided products and services that meet the needs ofcustomers and society at the time.

Performance Trends

Our business performance in recent years has changed like this. With the establishmentof the Act on Special Measures against Dioxins in 1999, renewal and remodeling ofmunicipal solid waste treatment plants were concentrated around 2000. In thefollowing few years, the demand for construction decreased due to a backlash, so we
expanded overseas in the mid-2000s to capture a new market, but we ended uprecording a significant loss.
Since the late 2000s, we have shifted our focus on establishing its footing in Japan as
demand for municipal solid waste treatment plants has recovered. And, we focused onafter-sales service which is our base revenue. The introduction of the FIT system in 2012
led to a sharp increase in demand for biomass power plants. As a result, both sales andordinary income have recovered to the point where they are stable.

Long-Term Vision towards 2030 (Vision 2030)

Our group's Vision 2030 is a long-term vision for the company's future by 2030. We
promote ESG management aimed at sustainable growth together with its customers
and society and seek to remain an indispensable part of society as a leading company,
focusing on the use of renewable energy and environmental protection. We aim toachieve an ordinary income of 20 billion yen in fiscal 2030 by maintaining andexpanding our current business with recurring revenue model businesses such as
maintenance and operation management after plant delivery as growth drivers.

Business Segment

To realize our long-term vision, we are currently operating in four segments:
Environment and Energy (Domestic/Overseas), Package Boiler, and Equipment andSystems. And, Domestic Environment and Energy Business account for approximately
80% of net sales. This business also drives profits.
Approximately 60% of the net sales of this business are from municipal solid waste
treatment plants, including waste treatment plants for local governments; 30% fromenergy plants business, including biomass power plants for private companies; and 10%
from water treatment plants business and other businesses. These businesses focus on
the engineering, procurement, and construction of plants (EPC) and after-sales services.

Business Model (Domestic Environment and Energy Business)

I would like to provide an overview of EPC and after-sales service business models inthe Domestic Environment and Energy Business.
In addition to supporting local waste disposal, the plants supplied by our company are
essential infrastructure for providing electricity and heat and must operate stably for an
extended period, 20 and 30 years. We will build technically reliable plants, and afterdelivery, we will continuously conduct plant operation management, maintenance, andremodeling, maintain and improve performance, and achieve stable operation. We will
support our customers' administrative services and business activities over the longterm and build relationships of trust.
It takes approximately two to five years to build a plant and deliver it to a customer.
After the contract is signed, the entire plant is designed, the necessary equipment isordered from a supplier or manufactured at our plant, and then transported to theconstruction site.
As construction managers, we supervise the installation of equipment, piping, electricalwork, and construction plants. In the test run after completion of the plant, eachequipment and facility is inspected to ensure that they operate as planned, and thenthe plant's overall performance is checked. We will deliver the product to the customer
after confirming the version of the product.
After that, we will continue to provide after-sales services such as operation
management, maintenance, and remodeling work. In municipal solid waste treatment
plant business, from the standpoint of utilizing the private sector, orders are increasing
in operation & maintenance (O&M) business and the Design, Build, Operate (DBO)
business in which operation management is combined with maintenance for long
periods of 10 or 20 years are increasing.

Illustration of Recording of Net Sales/Order Backlog in DBO BusinessThis shows the illustration recording of net sales and order backlog, frequently asked.
DBO operations are broadly divided into EPC and O & M. At the time of the contract,
EPC records the total amount of the contract as orders proceeds. Since the construction
period is approximately two to five years, the portion that has not yet been recorded in
net sales at the end of the period, that is, the amount obtained by subtracting the net
sales for those years from the order amount is recognized as the order backlog.
In the case of O & M, the total contract amount over the contract period is recorded asorders amount at the time of the contract and then recorded as net sales over thebusiness period from the day the plant is completed and starts operation. Therefore,
the order amount and the order backlog also include the amount for 10 and 20 years.
When local construction is in progress, EPC sales tend to increase toward the latter halfof the project.

Financial Data (Quarterly)

The following are quarterly financial data. The amount of orders received varies fromquarter to quarter depending on the timing of the contract because the amount ofeach order is substantial, for the core business of municipal solid waste treatment
plants.

Financial Data (Quarterly)

In terms of net sales, the fourth quarter tends to be larger than the other quarters dueto the tendency for more construction projects to be due at the end of the fiscal year
and the tendency for more progress and deliveries toward the fourth quarter. I would
appreciate it if you could refer to it.
Finally, we at the Takuma Group will strive to become a great partner for our customers
and contribute to the realization of a sustainable society by implementing ESG
management through ideas and proactive efforts as a leading company.
We aim to enhance corporate value by growing sustainably alongside our customers
and society, and to satisfy all stakeholders such as customers, shareholders, employees
and business partners who trust us. We look forward to your continued support andencouragement.