Financial Briefing Materials
for FY2018
Takuma Co., Ltd.
May 24, 2019

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Contents

1. Company Overview

2. Consolidated Results for FY2018

3. key initiatives of the Medium-Term Management Plan

4. Consolidated Earnings Forecast for FY2019

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11. Company Overview

Copyright ©TAKUMA CO., LTD. All rights reserved2Company Outline
Name

Takuma Co., Ltd.

Established June 10, 1938
Representa
Hiroaki Nanjo, President and CEOtive
Head office 2-2-33 Kinrakujicho, Amagasaki-shi,locationHyogo Prefecture

Capital13.3 billion yenMain
Business

EPC and after-sales service for environmental and energy plants, including waste
treatment facilities and biomass power plants

Directory

Head Office, Osaka Office, Tokyo Branch, Hokkaido Branch, Tohoku Branch,
Chubu Branch, Kyushu Branch, Okinawa Branch, and Harima Factory
Overseas: Taipei Branch

Employees(Non-consolidated) 852(Consolidated)
3,619 (as of March 31, 2019)

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3History
2017
Order received for a 50,000 kW biomass powerplant(FIT-approved facility)

2012Feed-in tariff (FIT) program launched.
1999
Act on Special Measuresagainst Dioxins enacted.
1986
The first overseas delivery
of a waste incineration plantcompleted (U.S.A.)

2000 and beyond
Takuma continues to provide technology for utilizing and rendering
harmless a variety of waste and biomass energy sources through its
businesses in the renewable energy and environmental protection
fields. We established local subsidiaries overseas and continue to bringour technologies to customers not only in Japan, but also worldwide,
particularly in Asia.

1972 to 1999
In 1972, Takuma changed its name to Takuma Co., Ltd. As it grew, thecompany worked to develop technologies in response to a variety of needs.
• Demand for energy savings in industry• Accommodation of growing and diversifying municipal waste• Improvement of water quality by water treatment equipment

1951 to 1971
Takuma established its position as a manufacturer of not only boilers, but also
environmental and hygienic equipment.
• The company developed heat recovery boilers that use waste heat from plants.
• It also developed modern waste incineration technology.
• It entered the water treatment market.

1912 to 1950
Tsunekichi Takuma adopted the founding spirit of “Serve society throughboiler manufacturing,” marking the birth of the stance and philosophy thatwould become the cornerstone of Takuma’s operations.

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1963Japan's first 24 hour
operating waste
incineration plantdelivered
1949
Bagasse-fired boiler,
the first product of its
kind to be exported

4

Management Principles
Company Motto
Value Technology, Value People, Value the EarthManagement Principles
Takuma will strive for social contribution, corporate value enhancement, longterm corporate development and the satisfaction of all stakeholders by providing
goods and services that are needed and recognized as valuable in society.
In 2006, as the management principles of Takuma and the Takuma Group, we have organized andclarified the values of “Service to the nation through boiler manufacturing,”* which is the founding spiritof our company (Takuma Boiler Manufacturing Co., Ltd. at that time). We aim to contribute to society bysupplying goods and services that we provide. This spirit can also be applied to the concept of
Sustainability and CSR that in recent years has become a vital issue for corporate management.
*Service to the nation through boiler manufacturing,
It was the mission statement of Takuma, then Takuma Boiler Manufacturing Co., Ltd., founded by Tsunekichi Takuma,
one of the ten great inventors of Japan during the period of Meiji and Taisho (1868 - 1926).
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5Corporate Vision
The Group will strive to maintain its role of being an indispensable
presence in society as a leading company in the field of renewable energy
utilization and environmental protection and achieve 10 billion yen in
ordinary profit in FY2020.
We’re implementing initiatives to address the Sustainable Development Goals (SDGs)
through our business activities.

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6Segments
Package Boiler Business

Equipment and Systems Business

Vacuum-type hot water heaters, Oncethrough boilers

Building equipment, Equipment for the semiconductor
and electronic device industries

7.2%
13.8%

2.5%
Overseas Environment
and Energy Businessbiomass power plants, waste
treatment plants

Net sales
FY2018Domestic Environment
and Energy Business

76.5%

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municipal solid waste treatment
plants, water treatment plants, energyplants

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Domestic Environment and Energy Business（Related SDGs）

Municipal Solid Waste Treatment
Plant BusinessNo. of waste incineration plants delivered :Most of any manufacturer in Japan
We supply the following products and services tolocal governments:
Waste incineration plants, Life extension projects,
Maintenance Stoker-type incinerators
 Methane fermentation systems
 Crushing and sorting systems

Waste incineration plants

EPC*1 and O&M*2 businesses (including DBO*2)◇DBO business projects: 12 (FY2019, including projects
under construction)*1 EPC: Project construction contracts that include design, procurement, and construction(engineering, procurement, construction)*2 DBO: An approach in which the public sector provides funding for a private-sector entity
to design, build, and operate a facility (design, build, operate).
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Waste incineration plants(DBO)

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Domestic Environment and Energy Business（Related SDGs）

Energy plants
We have extensive experience and expertise that we have accumulated since itsfounding.
No. of plants delivered under FIT program: Most of any manufacturer in Japan

We supply the following products and services toprivate-sector businesses:
Biomass power plants, Industrial waste treatment plants,O&M, operation management, and maintenance Step grate stoker
 Traveling stoker
 Bubbling fluidized bed
 Circulating fluidized bed

Biomass power plants

We propose the combustion furnace types(abovefour types) and plant system best suited to the fuelto be used at each facility and plant on a customorder basis.
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Industrial waste treatment plants

9Domestic Environment and Energy Business（Related SDGs）

Water treatment plants
Energy-saving/energy-creating sludge power generation systems with low
greenhouse gas (N2O) emissions
We supply the following products and services,primarily to water treatment plants operated by
local governments:
 Sewage sludge power generation system EPC(Step grate stoker incinerators)
 Moving-bed sand filtration systems

Sewage sludge power generation
systemWe develop products with emphasis on energysaving and maintainability.

Moving-bed sand filtration systems
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10Other segments（Related SDGs）■Overseas Environment and Energy Business
Sales and after-sales service of biomass power plants, waste
treatment plants■Package Boiler Business
Manufacturing and sales of package boiler• Vacuum-type hot water heaters (Vacotin Heater)• Once-through boilers (Equos)■Equipment and Systems Business
Installation services of building
equipment (Air-conditioning, water,wastewater, and hygienic equipment)

Manufacturing and sales ofequipment for thesemiconductor andelectronic device industries

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11Consolidated results and dividends
Sales Ordinary profit(100M yen) (100M yen)

2,000

Dividend per share(yen)1999 Act on Special Measures against Dioxins enacted.

25040
2012 Feed-in tariff (FIT) program launched.

1,800

200

35

1,600

150302008 Global financial crisis occurs.

1,400
1,200

100255020015△5010

△1005

1,000
8006004002000 △1500
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

FYSales(100M yen)
Ordinary profit(100M yen)
Dividend pershare (yen)Ordinary profit
Dividend per share
Sales（forecast）
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
1,060 1,376 1,709 1,612
52

119

220

152

951 1,0374943

987 1,056 1,049

17 △ 28 △ 51 △10716951

891 1,010

963

963 1,038 1,130 1,163 1,181 1,219 1,300

204371

94

7391

96116

106

123

125

10.00 10.00 15.00 10.00 10.00 10.00 10.00 10.00 5.00 0.00 0.00 0.00 2.00 4.00 6.00 9.00 11.00 13.00 16.00 22.00 26.00

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122. Consolidated Results for FY2018

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13Consolidated ResultsReplacement and modification demand for waste treatment plants was robust.
Orders for biomass power plants under the FIT program increased.
We made steady progress on plant construction, and cost reductions
contributed to the bottom line.
（100M yen）

FY2017FY2018ChangeOrders received

1,771

1,798

27

Net sales

1,181

1,219

37

Operating profit

10011615

Ordinary profit

106123

16

Profit attributable to owners of parent

7888

10Profit per share (Yen)

94.93

107.1012.17Dividend per share (Yen)

16.00

22.00

6.00

Backlog

2,730

3,309

578

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14Consolidated Results by Segment（100M yen）

Ordersreceived

Net sales

Operatingprofit

Backlog

Domestic
Environment and Energy

1,536

937

124

3,222

Overseas
Environment and Energy

730

15

Package Boiler

174

169

938

Equipment and Systems

85

88

345

1,804

1,225

138

3,311

(6)

(6)

(22)

(2)

1,798

1,219

116

3,309

FY2018Total

Adjustments
Total

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15

Consolidated financial positionTotal assets rose due to increases in investments and other assets.
Net assets rose as a result of profit attributable to owners of parent.
The capital adequacy ratio rose, as did net assets per share.
（100M yen）

FY2017FY2018ChangeTotal assets

1,514

1,559

45

Net assets

76783063

Capital adequacy ratio(%, points)

50.4

53.0

2.6

924.251,000.34

76.09

Net assets per share (yen)Copyright ©TAKUMA CO., LTD. All rights reserved

16Topic 1 - New TAKUMA Building

Bolstering Takuma’s offices and training facility(2018 to 2020)
We will build the New TAKUMA Building next tothe Head Office to address issues including
insufficient office space.
••

Creating a sustainable facility that makes extensive use oflumber such as cross-laminated timber (CLT)
Developing a training floor that can accommodate large-scaletraining with up to 150 participants

Enhancing plant remote monitoring andoperational support facility (Solution Lab)
Contributing to stable facility operation•••

Providing 24-hour remote monitoring of operating conditions andoperational support
Using big data to resolve operational issues
Using simulators to improve operational technologies

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17Topic 2

Long-term (20-year) O&M contracts for biomass power plants■We began our first O&M contract for a biomass power plant (in April 2019).
■We've invested in the project with the goal of strengthening support and partnership.
■Sara Inc. (Kasaoka, Okayama Prefecture)
This venture company operates one of the world’s most advanced protected horticulturebusinesses by combining vegetable cultivation in semi-enclosed greenhouses with a biomass
power plant.
■Power, heat, and carbon dioxide from the plant are supplied to greenhouses.

Biomass power plantGreenhouse

Copyright ©TAKUMA CO., LTD. All rights reserved18Topic 3

Takuma project receives the 2019 Grand Prize at the Japan Resilience Awards■ Advanced, extensive disaster readiness initiatives at Imabari Clean Center (completed in March 2018)

received the Grand Prize, the highest award at the Japan Resilience Awards.
■The facility became the first waste treatment plant in Japan to introduce the new concept of phase-free*,which allows facilities to leverage their disaster readiness initiatives during normal times.
■Takuma is pursuing initiatives that help harden Japanese infrastructure.
■We propose facilities that create new value for their communities.

Overview of Imabari Clean Center’s initiatives

Facility-focused initiatives(robust facilities and equipment)

Organization-focused initiatives(human support and regional connections)*Phase-free:
A new concept in the area of disaster readiness that does away with distinctions between “phases” (i.e., normal times and disasters) so that facilities can beused similarly during both normal times and in the event of a disaster, increasing the value they provide under both sets of conditions.

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19

3. key initiatives of the Medium-Term Management Plan

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20

Positioning of the 12th Medium-Term Management PlanFinal stage of the current Medium- and Long-Term VisionWe're working to build capabilities based on forecast changes in the businessenvironment so that we can realize our vision and achieve steady growth
afterwards.
The Group will strive to maintain its role of being an indispensable presence in society as a leading company in the field ofrenewable energy utilization and environmental protection
Medium- and Long-Term Vision(Corporate Vision)

Previous Medium- andLong-Term Vision

Next Long-Term Vision

10 billion yen in ordinary profit in FY2020.
We will work to build structures capable of consistently earning ordinary profit of atleast JPY 10.0 billion even as the business environment undergoes major changes.

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

11th Medium-Term
Management Plan
10th Medium-Term
Management Plan
(FY2012 to FY2014)

9th Medium-Term
Management Plan
(FY2009 to FY2011)

Profitability through selection
and concentration ofresources

Reinforcement ofbusiness foundation forstability and profitability

Cumulative ordinary
profit results

JPY 25.7 billion(FY2015 to FY2017)

Strengthening ofcorporate capability tofacilitate steady growth

Steady expansion interms of both quantityand quality

financial targets
Cumulative ordinary profit

consistently earning
ordinary profit of at least
JPY 10.0 billion

JPY 33.0 billion
Cumulative ordinary
profit results
JPY 31.9 billion

FY2018

ordinary profit

JPY 12.3billion

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Policies of the 12th Medium-Term Management PlanCreating new value from the customer's perspective
Building a business and management foundation that is resilient during change
1. Strengthening and expanding our revenue
foundation

1. Creation of customer value
Strive to create new value from the customers’
perspective and avoid price competition byworking closely with, and developing a deep
understanding of, customers.

2. Achieving sustained growth

2. Ongoing innovation
Achieve sustained differentiation by pursuinginnovation in terms of both technologies and businessmodels, and leverage that differentiation to create thevalue demanded by customers.

3. Accommodation of environmental
changes and risk management
Adapt to changes of the business environment inwhich the company operates (e.g., changes in theeconomic climate, revisions to applicable laws, andchanges in customer needs) and strengthen initiatives
to treat such changes as business opportunities.

3. Increasing productivity, for example byreforming business processes

4. Using human resources effectively

5. Continuing to pursue compliancemanagement

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Emphasis of Future Activities■Domestic Environment and Energy BusinessMunicipal Solid Waste Treatment Plant BusinessBusiness Environment As facilities age, there is ongoing robust demand for renewal andservice life elongation.
 Volume is growing for DBO projects as well as O&M services forexisting facilities.
Waste-to-Energy Plant
DBO ProjectEmphasis of Future Activities

 Strengthen the profitability of our plant operationbusiness.
 Further strengthen initiatives to prolong theservice life of facilities.

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Waste-to-Energy Plant
Primary equipment
improvement project23

Emphasis of Future Activities■Domestic Environment and Energy Business
Energy Plant BusinessBusiness Environment
 FIT demand remains robust.
 The number of plants targeted for maintenance is increasing asfacilities are completed and transferred to customers.
 There is growing demand for plant operational management and O&M.
Biomass Power Plant

Emphasis of Future Activities Capture new orders for FIT biomass plants.
 Strengthen our maintenance structures.
 Scale our waste management expertise
horizontally to other businesses.

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Biomass Power Plant

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Emphasis of Future Activities■Domestic Environment and Energy Business

Water Treatment Plant BusinessBusiness Environment
 There is growing demand for sludge incineration plants that conserveand create energy.

 There is increasing use of PPP/PFI arrangements in the sewer
business.
Sludge-Fueled Power System
Demonstration Plant

Emphasis of Future Activities

 Strengthen the competitiveness of our sludgefueled power system.
 Scale our waste management expertise
horizontally to other businesses.
Moving bed upflow continuous
sand filtration system(high-speed)

Copyright ©TAKUMA CO., LTD. All rights reserved25Emphasis of Future Activities■Overseas Environment and Energy Business
Biomass power plants
Business Environment
 Demand for biomass power plants in Southeast Asia remains robust.

Emphasis of Future Activities
 Strengthen the ability of our local subsidiary (SIAM TAKUMA) tocarry out its business operations.

Waste treatment plants

Bagasse Fired Boiler Plant(Thailand)Business Environment
 There is a growing need for proper waste management and energy
utilization against a backdrop of growing urbanization, increase ofwaste volume, and diversification of waste characteristics.

Emphasis of Future Activities
Build structures to facilitate collaboration with partner companies.

Build schemes for entering new markets.

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Waste-to-Energy Plant(Taiwan)26

4. Consolidated Earnings Forecast for FY2019

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Consolidated Earnings Forecast for FY2019
We expect to see continued robust demand for waste incineration plants andbiomass power plants.
Sales and profit will rise thanks to progress on plant construction.
We plan to increase the dividend per share.
（ 100M yen ）FY2018ResultsFY2019Forecast

ChangeOrders received

1,798

1,400(398)

Net sales

1,219

1,30080

Operating profit

116

118

1

Ordinary profit

123

125

1Profit attributable to owners of parent

88

90

1Profit per share (Yen)

107.10108.87

1.77

Dividend per share (Yen)

22.00

26.00

4.00

Backlog

3,309

3,409

100

Copyright ©TAKUMA CO., LTD. All rights reserved28Supplementary Material（ Millions of yen ）Capital investment &Research and evelopment expenses

FY2018Results

FY2019Forecast

ChangeCapital investment

638

1,600

961

Depreciation

797

850

52

Research and development expenses

960

1,300339Forecast by Segment for FY2019

Orders received

Domestic Environment and Energy

109,000

104,000

327,292

Overseas Environment and Energy

6,000

1,000

5,525

Package Boiler

17,50017,5003,872

Equipment and Systems

8,000

8,000

4,502

Total

140,500

130,500

341,192

(500)

(500)

(252)

140,000

130,000

340,939

Adjustments
Total

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Net sales

Backlog29Conclusion

Reflecting its goal of maintaining its role of being an indispensable
presence in society as a leading company in the field ofrenewable energy utilization and environmental protection, theTakuma Group will continue to contribute to the resolution ofsocial issues and the realization of a sustainable society byproviding new value in the world.

球Copyright ©TAKUMA CO., LTD. All rights reserved30

Handling of this document

Information related to performance forecasts, business plans, and related topics included in thisdocument or otherwise provided during financial briefings is based on data currently available to theCompany and on certain assumptions that are deemed to be reasonable. This information includes
elements of risk and uncertainty.
Please note that actual performance may diverge significantly from these forecasts for a variety ofreasons.
Takuma is under no obligation to update, revise, or announce changes to forward-looking statements inthis document following its publication, except as required by applicable laws and regulations.
Takuma holds the copyright to this document and prohibits its duplication or reuse for any purpose
without its prior consent.

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31