2020

Annual ReportBringing new value to society
with +TAKUMAFounder Tsunekichi Takuma invented the ﬁrst boiler to be produced entirely in Japan by bringing
expertise and technology to a product that had to be imported until that time.
By passing down this philosophy over time and augmenting it with Takumaʼs technology, we
continue to create products with new value today.

Contents

Going forward, we will continue to provide new value to customers through plants that take advantageof the proprietary technologies we have developed since our founding in areas such as combustion,
waste treatment, and water treatment.

3

Financial Highlights

5

Message from Top Management

9

Takuma Group 12th Medium-Term Management Plan
− An Overview■ Municipal solid waste treatment plants■ Industrial waste treatment plants■ General-purpose boilers

12

Company Outline

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

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

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

13

The Takuma Group Network

14

The History of Takuma

15

Introduction to Takumaʼs Businesses

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
plants● Various types of pollution
prevention equipment●●

Industrial waste treatment plants

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●

1. Environmental Plant Business
2. Energy Plant Business
3. Overseas Business
Main Recent Projects
29

Corporate GovernanceDirectors and Executive Officers

Super EQOS
Waste incineration plants

Bulky waste crushing plants

Industrial waste treatment plant

Plant that generates power from industrial
waste and provides heat to a plantation

Vacotin Heater Thermoheater

Corporate Governance

RE Boiler

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

Compliance & CSR Promotion Structure
Risk Management Structure■ Energy plants■ Water treatment plants■ Air-conditioning equipment and clean systems

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

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

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

Sewage and wastewater
treatment plants● Various types of advanced
sewage treatment plants● Sludge treatment plants

Biomass boilers● Fossil fuel boilers● Waste heat boilers● Power plants●●

Biomass power generation boiler

1

TAKUMA 2020 ANNUAL REPORT

Waste heat boiler

Sewage sludge-fueled power
plants● Landﬁll leachate treatment
plants●Upﬂow moving-bed sand ﬁltration system Sewage sludge-fueled power plant

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

Clean oven

Clean booths

Business Continuity Plan (BCP) / CSR Activities
IR Activities / Stock Information
35

Financial Information
Status of Business Activities
Financial Statement

Chemical air ﬁlters

TAKUMA 2020 ANNUAL REPORT

2

Financial Highlights

Trend in Principal Management Indicators

150,000

March 2020

¥ 103,875¥ 113,088¥ 116,309¥ 118,199¥ 121,951¥ 134,454

113,763

100,000

Net sales$ 1,235,453
50,000Operating income
Ordinary proﬁt

¥
¥

8,223
9,116

¥
¥

9,189
9,646

¥
¥

10,974
11,606¥¥

10,03010,670¥¥11,604
12,334¥¥9,600
10,301$$150,000

100,000

50,000134,454

March 2020

121,951of) ( Thousands
U.S. dollars )200,000

118,199

March 2019

200,000

116th)

116,309

March 2018

) (

116th

Millions ofyen

Net sales

Millionsof yen113,088

March 2017

) (

115th

Millions ofyen

148,830

March 2016

) (

114th

Millions ofyen(
179,829

March 2015

) (

113th

Millions ofyen)

191,026

) (

112th

Millions ofyen●

177,116

End of ﬁscal year

(

111th

Millions ofyen(Millionsof yen99,919Fiscal year

Value of orders received●

103,875

Trend in Principal Management Indicators and Other Financial Data

112th

113th

114th

115th

88,215
94,6490
Fiscal year

8,030

¥

7,817

¥

8,551

¥

7,847

¥

8,854

¥

7,445

$

68,413Comprehensive income

¥

9,398

¥

7,149

¥

9,937

¥

10,177

¥

7,325

¥

5,881

$

54,041

(

113th

114th

115th

0
Fiscal year

116th

Millionsof yen

●

)

111th

116th

Net sales composition ratios (FY2019)

Financial Highlights

¥

112th

Operating income●

Proﬁt attributable toowners of parent

111th

Domestic Environment and Energy Business
Overseas Environment and Energy Business

20,000

Package Boiler Business

5.8%

Equipment and Systems Business

0.83

-

-

-

-

-

-

42.4

44.1

48.1

50.4

53.0

51.8

51.8

14.1

9.7

13.6

10.7

10.9

10.5

11.1

12.3

12.3

13.3

13.3

10,817¥ (11,733)$ (107,806)

Cash ﬂows fromoperating activities¥

21,727

¥

6,728

¥

9,590

¥

5,141

¥

Cash ﬂows frominvesting activities

¥

(160)

¥

(445)

¥

143

¥

(328)

¥ (1,382)

Cash ﬂows fromﬁnancing activities¥ (3,707)

End-of-year balance of
cash and cash equivalents¥ (2,900)¥ (1,787)¥ (1,670)

8.9

8.9

¥ (9,120)

¥

(202)

¥ (4,350)$(1,858)$ (39,971)

111th

¥

45,0083,266¥

48,335
3,366¥

57,132
3,447¥

60,283
3,609¥

61,0273,619¥

44,753
3,816$

411,224
3,816

Note:
1. U.S. dollar amounts are shown solely for the convenience of readers and are translated at the rate of ¥108.83 to U.S.$1.00,
the exchange rate prevailing at March 31, 2020.
2. Ordinary income is a measure of accounting proﬁt that equals operating income plus other income minus other expenses,
except for extraordinary items under Japanese GAAP.

TAKUMA 2020 ANNUAL REPORT

112th

113th

114th

115th

116th

Trend by Segment●(

Domestic Environment and Energy Businessin millionsof yen)140,000

70,0000
Fiscal year
year●

Number of employees

30Fiscal year

Net sales
Value of orders received

10,488Operatingincome12,405

114th
'18

115th
'19

10,619() Value of orders received

0
Fiscal year
year

1,015

114th
'18

)

Operatingincome

904

115th
'19

966

116th
'20

Overseas Environment and Energy Business( in ofmillions
yen )10,000Net sales

5,000

2,500

0

(

in millionsof yen0
Fiscal year
year)

( in ofmillions
yen )10,000

1,000

5,000

0
Fiscal year
year

( in ofmillions
yen )
500

78

114th
'18

116th
'20

115th
'19

Net sales
Value of orders received

0

（202）

Equipment and Systems Business

2,000

0

OperatingincomeValue of orders received

5,000

●

Net sales

20,00010,000in millionsof yen

163

116th
'20

Package Boiler Businessin millionsof yen

(

●

1,351

$

Operatingincome-500( in ofmillions
yen )
1,000

229
114th
'18

6,790

90.36

1,143

¥

107.10

7,840

¥

-

16.8

Price-to-earnings ratio

94.93

80.1%

799

Return on equity(%)

¥

5,000

8,567

Capital adequacy ratio (%)

9.59

3,057

103.43

$

8,836

¥

¥ 1,043.15

3,873

94.55

¥ 1,000.34

7,141

¥

924.25

3,401

97.12

¥

10,0007,697¥$ 1,502,329

9,600

Net income per share（JPY or USD）

¥ 163,498

123,154815.77¥ 155,989

17,925¥¥ 151,489

13.2%

0.9%

11,604708.18781,403108,124¥$

17,869631.5385,04010,030¥¥153,628

Net assets per share（JPY or USD）

Diluted net income per share（JPY or USD）

¥ 140,201

83,08817,476¥ 132,614¥

10,974¥ 123,127

76,726

93,724

Total assets¥

16,95567,7279,189¥

148,892

58,80917,696¥

8,223

52,516

90,075¥

17,321

Net assets

15,000

361

384

115th
'19

116th
'20

500

0

TAKUMA 2020 ANNUAL REPORT

4

Message from Top Management

We continue to help solve social
problems and contribute to the sustained
development of the world by creating
valuable products and services.

Marshaling the Takuma Groupʼs strengths
to maximize proﬁts and enhance its corporate value
The Takuma Group, which has adopted the goals of“aiming to maintain our role of being an indispensable
presence in society as a leading company in the ﬁeld of
renewable energy utilization and environmental protection”
and of achieving an ordinary proﬁt of JPY 10 billion in
FY2020, has embraced a vision of building structures
capable of consistently earning an ordinary proﬁt of at least
JPY 10 billion even as the business environment undergoes
a process of signiﬁcant change, and we are pursuing avariety of business activities to achieve that vision. We
believe that we will be able to do so by marshaling thestrengths not only of Takuma on a standalone basis, but of
the entire Group, and our management is guided by thebasic policy of maximizing proﬁts and enhancing corporate
value on a consolidated basis. To that end, we are diligently
implementing the 12th Medium-Term Management Plan
(FY2018 to FY2020), which takes into account changes thatare anticipated to occur in the business environment in the
future and which adopts as its core theme the need toenhance our corporate capabilities to facilitate the5

TAKUMA 2020 ANNUAL REPORT

achievement of our vision and consistent growth
afterwards.

Adapting to changes in the business environment andsecuring a consistent position in the markets we serve
The Takuma Groupʼs core businesses are the constructionof waste treatment plants, energy plants, water treatment
plants, and other similar facilities (through its EPC
business*) and the provision of after-sales services forthem, including maintenance, operational management,
and operation.
In the Groupʼs principal business domain, expectations
with regard to renewable energy and its potential to help
realize a low-carbon and post-carbon society are rising as
the effects of climate change increasingly manifest
themselves. Additionally, work is being planned to updatesuperannuated public infrastructure and to extend its
service life. At the same time, the business environment is
expected to undergo major changes over the medium andlong term, including shifts in demand in response to
evolving national policies and the structure of society, forMessage from Top Management

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

example due to Japanʼs low birthrate and the shrinking andaging of its population; increased reliance oncomprehensive contracts as part of a trend to outsource
government services; and increasing sophistication anddiversity in customer needs.
In such a business environment, the plants provided by
the Group through its EPC business have garneredcustomer praise and earned the Group a consistent positionin the markets it serves. Continuing this trend, customers
will begin operating sewage sludge-fueled power plants
capable of creating energy while reducing greenhouse gas
emissions this year.
As facilities that play an essential role in maintaining
peopleʼs lives and our customersʼ business activities, theplants we build are called upon to operate for 20 or 30 years
after delivery. In our after-sales service business, weformulate long-term repair plans based on the extensive
expertise the Group has accumulated over time so that
customers can use those plants longer and more effectively,
and we help them realize stable operation over the longterm by carrying out optimally planned and timed
maintenance based on detailed site inspections. We
recently launched our ﬁrst 20-year long-term operations
business at an energy plant, augmenting similar services
that we provide for seven waste treatment plants. Our next
priority is to build implementation and management
structures for a long-term operations business for water

treatment plants and to carve out a path for expanding
those businesses.

Pursuing sustained growth for society andour company based on our founding philosophyof “Serve society through boiler manufacturing”
The 12th Medium-Term Management Plan represents theﬁnal stage of our current medium- and long-term vision(FY2012 to FY2020), which means that FY2020 is a year
during which we will formulate the next long-term vision.
The previous medium- and long-term vision sought toimprove proﬁtability through the selection andconcentration of resources, while the current medium- andlong-term vision seeks to reinforce our business foundation
for stability and proﬁtability and to achieve a steady
expansion in terms of both quantity and quality in order tolead to a strengthening of corporate capability to facilitatesteady growth based on our development of structures
capable of consistently securing an ordinary proﬁt of atleast JPY 10 billion. In formulating the next long-term
vision, we will be considering how the Takuma Group canbest forge ahead into the future.

TAKUMA 2020 ANNUAL REPORT

6

Message from Top Management

Company Motto

Value Technology, Value People, Value the EarthManagement Principles
At the same time, there is broad concern that the
COVID-19 pandemic will impact social and economic
activity in an increasingly signiﬁcant manner for an
extended period of time, and there is a growing sense of
uncertainty with regard to the future. As we face
unprecedented difﬁculty in forecasting what is to come, itwill be critical to strengthen our ability to adapt to change
and recover from crisis.
Takumaʼs Management Principles state, “Takuma will
strive for social contribution, corporate value enhancement,
long-term corporate development and the satisfaction of all
stakeholders by providing goods and services that areneeded and recognized as valuable in society.” Thisphilosophy can also be found in our founding spirit of“Serve society through boiler manufacturing*,” and itmeans contributing to the world through the goods andservices that we create. It also informs Corporate Social
Responsibility (CSR), which we have currently embraced asa key issue in the companyʼs management. We will continue
to work toward the realization of sustained growth ofsociety and our company in keeping with these principles.
In addition to creating new value in the ﬁelds of renewableenergy and environmental protection, we will strive toaddress the new challenges arising from the COVID-19
pandemic by working to increase the effectiveness of ourcompliance, risk management structures, and BusinessContinuity Plan (BCP).

Takuma will strive for social contribution, corporate value enhancement, long-term corporate development and the satisfactionof 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“contribution to society by supplying goods and services that we provide.” This spirit can also be applied to the concept ofCorporate 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.

Takuma Group Ethics Charter
Takuma and the Takuma Group companies believe that it is essential for the sound development of the group that all of thedirectors and employees remain aware of our social responsibilities and the circumstances surrounding us as well as act in
response to social ethics complying with applicable related laws and ordinances. Bearing the above in mind, we haveestablished and will promote this ethics charter as our code of conduct, aiming to realize our management principles.
1.
2.
3.
4.
5.

7.

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 human rights,
labour, environment, and anti-corruption. We will work todevelop our business while understanding and respecting
these globally shared principles. In addition, concerning theimplementation of the Sustainable Development Goals(SDGs) adopted by the United Nations and theprovisions of the Paris Agreement adopted at COP21, theGroup is helping resolve social issues with technologies for
reducing emissions of greenhouse gases like carbon dioxidethrough such means as high-efﬁciency power generation
using waste and biomass.

July 2020

Hiroaki Nanjo
President and CEO
Takuma Co., Ltd.

Message from Top Management

6.

We shall strive for a proactive social contribution while establishing a harmonious coexistence with the global
environment as good corporate citizens.
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.
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.
We shall respect fundamental human rights and never practice discrimination.
We shall strive to provide high quality products and services, based on our advanced technologies, to attain highacclaim and conﬁdence from our customers.
We shall strive to disclose corporate information to shareholders and investors through Investor Relations (IR) andother activities on a timely and equitable basis.
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.

Takuma Group Code of Conduct
Harmony with society

Practice of customer satisfaction

1. Coexistence with the global environment

12. Safety of products and services as well as ensuring reliability

2. Coexistence with international society

13. Policies concerning advertising

3. Practice of social contribution activities

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

Respect for basic human rights

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

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

9. Prohibition of discriminatory actions

Sustainable Development Goals (SDGs)
Takuma is working to further progress toward theSustainable Development Goals (SDGs) through its
business activities.

10. Respect for individuality, personality, and privacy of employees
11. Safe work environment*EPC business: A business in which Takuma offers a turnkey
service extending from plant design to procurement andconstruction. (Plant Engineering, Procurement, and Construction)* Serve society through boiler manufacturing:
It was the Company Motto of Takuma, then Takuma Boiler
Manufacturing Co., Ltd., founded by Mr. Tsunekichi Takuma,
one of the ten great inventors of Japan during the Meiji andTaisho periods (1868-1926).

7

TAKUMA 2020 ANNUAL REPORT* 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 membersof society.

TAKUMA 2020 ANNUAL REPORT

8

Takuma Group 12th Medium-Term Management Plan - An Overview (FY 2018 to FY2020)

1.Positioning of the 12 Medium-Term Management Planth

The plan represents the ﬁnal stage of the current medium- and long-term vision (corporate vision), for which FY2020 is the target year.
● During its three years, we will achieve the vision and boost our corporate capabilities to prepare for steady growth in the future in response
to future changes that are forecasted to occur in the business environment.

3.Financial Target
Target: 3-year cumulative consolidated
ordinary proﬁt of JPY 33 billion●

Previous medium-and
long-term vision

Current medium- and long-term vision (corporate vision)

Next medium- andlong-term vision

Aim to maintain our role of being an indispensable presence in society as a leading company in the ﬁeld of renewableenergy utilization and environmental protection.
Ordinary proﬁt of JPY 10 billion in FY2020 (Build structures capable ofconsistently earning ordinary proﬁt of at least JPY 10 billion even as
the business environment undergoes major changes.)
12th Medium-Term Management Plan
(FY2018 to FY2020)
11th Medium-Term Management Plan
(FY2015 to FY2017)
10th Medium-Term Management Plan
(FY2012 to FY2014)
9 Medium-Term Management Plan
(FY2009 to FY2011)thConsistently secure annual
ordinary proﬁt of at least
JPY 10 billion.

JPY 25.7 billion

Many of the Groupʼs products are used for a long period of time,for example for 20 or 30 years from the time of delivery. Offeringhigh-quality after-sales service in an ongoing manner so that
customers can use those products more effectively and over a longer
period of time contributes to both customersʼ and the Groupʼs
proﬁts, helping to create a foundation for stable, long-term earnings.
We will work to further strengthen and expand our revenue
foundation by continuing to provide high-quality solutions
throughout the plant and product life cycle as we meet customersʼ
diversifying needs in an individualized manner.

2 Achieving sustained growthOver the 80 years since the Groupʼs founding, we have built a
reputation as an essential part of society by providing productsthat are recognized for their value utilizing our technologies
which are the core part of our company.
We will create customer value by continually developing unique
technologies, services, and business models based on Takumaʼsstrengths such as the technologies, track record, experience, andexpertise that weʼve accumulated through our business activities
to date. In addition, we will work to secure sustained growth bysecuring and creating competitive advantages as we respondquickly to changes in the business environment, such as evolving
customer needs and emerging social issues.

3

Increasing productivity, for example by reforming
business processes

The nature of the Groupʼs businesses is undergoing major
evolution as the business environment changes, for example due tochanges in social structure such as the shrinking and aging of

9

TAKUMA 2020 ANNUAL REPORT

Japanʼs population and the emergence of more advanced anddiverse customer needs as well as social issues.
We will strive to improve productivity, make effective use ofhuman resources, and further increase the level of value we provide
by fundamentally reviewing and rebuilding business processes thathave become increasingly complex in order to accommodate thesechanges while focusing on businesses with higher added value(which will help us create and provide value).

5 Continuing to pursue compliance management
The Group considers compliance to be a key foundation of its
corporate activities, and weʼve worked to spread awareness andfoster adoption of good practices by including compliance as apolicy in the last several Medium-Term Management Plans.
Awareness of the importance of compliance has steadily takenroot among our employees thanks to ongoing awareness-raisingand educational activities, and we will continue to pursue suchinitiatives to ensure that the trust weʼve built up in our quality andintegrity remains unshakable. In addition, we will work to further
spread and improve compliance awareness throughout the Groupby effectively implementing and utilizing mechanisms such as ourinternal reporting system and CSR awareness survey.

400

40

300

30

200

20

100

10

0

10th Plan

11th Plan

12th Plan

0

11th Medium-Term
Management Plan results

12th Medium-Term
Management Plan

2012 to 2014

2015

2016

2017

Total

2018

2019

FY2018 to FY2020

Order value

371.0

99.9

191.0

177.1

468.0

179.8

148.8

Sales

296.5

113.0

116.3

118.1

347.5

121.9

134.4

JPY 400 billion (approx.)(3-year cumulative total;reference value)

Ordinary proﬁt

25.7

9.6

11.6

10.6

31.9

12.3

10.3

Target: JPY 33 billion(3-year cumulative total)

4.Core Business Units and Emphasis of Future Activities
Municipal Solid Waste Treatment Plant Business

Water Treatment Plant BusinessBusiness Environment

Business Environment

As facilities age, there is ongoing robust demand for renewal and service life elongation.
● Volume is growing for DBO projects as well as O&M services for existing facilities.

●

●

●

There is growing demand for sludge incineration plants that conserve and create energy.
There is increasing use of PPP/PFI arrangements in the sewer business.

Emphasis of Future Activities

Emphasis of Future Activities

Strengthen the proﬁtability of our plant operation business.
● Further strengthen initiatives to prolong the service life of facilities.

●

●

●

Boiler Plant Business ( Japan)

4 Using human resources effectively
We will work to hire and train the diverse workforce that will beessential as we develop the Groupʼs businesses going forward. At
the same time, we will strive to create an environment that keeps
individual employees engaged in their work and able to make fulluse of their skills and abilities (by cultivating a healthy workplaceculture, reforming individual awareness, and facilitating fulﬁlling
workstyles).

50

Strengthen the competitiveness of our sludge-fueled power system.
Scale our waste management expertise horizontally to other businesses.

Boiler Plant Business (Overseas)

Business Environment

Business Environment

FIT demand remains robust.
● The number of plants targeted for maintenance is increasing as
facilities are completed and transferred to customers.
● There is growing demand for plant operational management and O&M.

●

●

●

Demand for biomass power plants in Southeast Asia remains robust.
Our ﬂagship bagasse-ﬁred boiler plants continue to experience intensecompetition.

Emphasis of Future Activities

Emphasis of Future Activities

Capture new orders for FIT biomass plants.
● Strengthen our maintenance structures.
● Scale our waste management expertise horizontally to other businesses.

●

●

●

Waste Treatment Plant Business (Overseas)
Business Environment●

There is a growing need for proper waste management and energy utilization
against a backdrop of growing urbanization, increase of waste volume, anddiversiﬁcation of waste characteristics.

Emphasis of Future Activities●●

Build structures to facilitate collaboration with partner companies.
Build schemes for entering new markets.

Takuma Group 12th Medium-Term Management Plan - An Overview

2.Policies of the 12th Medium-Term Management Plan

(Billion JPY)

(Billion JPY)

10th Medium-Term
Management Plan results

JPY 33.0 billion

JPY 31.9 billion

1 Strengthening and expanding our revenue foundation

The 12th Medium-Term Management Plan, which represents theﬁnal stage of our current medium- and long-term vision,
establishes the above targets to guide our achievement of thevisionʼs goal of consistently earning ordinary proﬁt of JPY 10
billion while simultaneously directing the company to utilize all
its resources to build a robust business andOrder value (left scale)management foundation in response toSales (left scale)
future changes in the business environment.

Ordinary proﬁt (right scale)

Steady expansion in terms of both
Cumulative ordinary proﬁt target
quantity and quality

Reinforcement of business foundation
Cumulative ordinary proﬁt results
for stability and proﬁtability

Proﬁtability through selection andCumulative ordinary proﬁt results
concentration of resources

Strengthening of corporate capability
to facilitate steady growth500

Capture orders continually by creating competitive advantages.
Strengthen the ability of our local subsidiary (SIAM TAKUMA) to carryout its business operations.

Package Boiler BusinessBusiness Environment
We are continuing to see a certain level of demand in Japan, particularly
in terms of renewal demand.
● The need for energy-conserving boilers is increasing overseas,
particularly in developing nations.
●

Emphasis of Future Activities●●

Maintain and expand our domestic business.
Expand our overseas business.

*DBO: Design, Build, Operate / O&M: Operation & Maintenance / PPP: Public Private Partnership / PFI: Private Finance Initiative
FIT: Feed-in Tariff / Bagasse: Fiber remaining after sugarcane is crushed

TAKUMA 2020 ANNUAL REPORT

10

Takuma Group 12th Medium-Term Management Plan - An Overview (FY 2018 to FY2020)

5. Progress in Implementing the 12th Medium-Term Management Plan

Company Outline
Name:
Head ofﬁce location:

TAKUMA CO., LTD.
2-2-33 Kinrakuji-cho, Amagasaki, Hyogo 660-0806, Japan
TEL +81-6-6483-2609 FAX +81-6-6483-2751 (operator)
Representative Director: Hiroaki Nanjo, President and CEO
Established:
June 10, 1938
Capital:JPY 13,367,457,968 (as of March 31, 2020)
Main business areas:
The design, construction and superintendence of a wide variety of boilers, plant machinery, pollution
prevention plants, environmental equipment plants, and heating and cooling equipment andfeed-water / drainage sanitation equipment and facilities
The design, construction and superintendence of civil, architecture and other works
Number of employees (non-consolidated): 875 (as of March 31, 2020)
Number of employees (consolidated):
3,816 (as of March 31, 2020)

In this section, members of Takuma's management team present progress in
implementing the goals of the 12th Medium-Term Management Plan,
which began in FY2018.

Increasing customer satisfaction by enhancing our technologicalcapabilities and strengthening our corporate capabilities toaccommodate change in the business environment

Hideki Takeguchi

Permits and registrations

Director & Senior Managing Executive Ofﬁcer
Executive Manager, Engineering Group●

Head Office, branch offices and other business offices
Construction license (Minister of Land, Infrastructure, Transport and Tourism license, Special 27-6129, Special 29-6129)
Construction consultant registration (Minister of Land, Infrastructure, Transport and Tourism registration, Construction
01-10202)

which makes it a year in which we must lay the groundwork forthe next Medium-Term Management Plan. I look forward toclosing out the ﬁnal ﬁscal year of the current plan by generating
solid results and starting to develop the next plan.
With regard to the policy of “strengthening and expanding ourrevenue foundation” as set forth in the current Medium-Term
Management Plan and our effort to strengthen our after-sales
service business to achieve it, we are working to develop
technologies for increasing the ease with which facilities can be
maintained and managed as well as technologies for plantmonitoring and operation, including advanced technologies suchas ICT and AI. Furthermore, we will add a Supply Chain Lab to theHarima Factory, which we plan to renovate and update in 2022, toserve as an after-sales service facility that can maintain a reliable
inventory of maintenance-critical parts and supply them rapidly.
In this way, Takuma will work actively to construct, maintain,
manage, and operate plants in the environmental and energy
ﬁelds and to help realize the Sustainable Development Goals thatsociety is pursuing by protecting the environment, realizing a
recycling-based society, and reducing CO2 emissions.

First-class architect office registration (01A02903)
ISO 9001 quality management system certification●

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

Internal Audit Dept.
Compliance & CSR Promotion Div.
Corporate Services Div.
Corp. Planning & Administration Div.
Committee of Executive Ofﬁcers
President

Audit & Supervisory Committee

Building a new factory and after-sales service facility

Audit & Supervisory Committeeʼs Ofﬁce●

Takuma had decided to update the Harima Factory and build a Supply Chain Lab.

We are planning to further enhance productivity and quality at the Harima Factory while carrying
on the high-quality manufacturing policies developed over the last 77 years and to transform thefacility into a sustainable factory that is kind to both workers and the surrounding environment.
As part of the development and enhancement of our after-sales service structures, the new factory
will include a Supply Chain Lab in an effort to build structures to maintain a reliable inventory ofparts that are essential to the operation of customersʼ facilities and supply them rapidly.
This new facility will help us meet a broad range of customer needs while contributing to society
in the areas of renewable energy and environmental protection.

11

TAKUMA 2020 ANNUAL REPORTISO 14001

JQA-EM0313
ISO 14001
certiﬁcation
Harima Factory

Corporate structure

Board of Directors

TOPICS

ISO 9001

Harima Factory

Takuma Group 12th Medium-Term Management Plan - An Overview / Company Outline

Strengthening our corporate capabilities so that we can securestable annual ordinary proﬁt of at least JPY 10 billion regardless of
how the business environment in which we operate changes in the
future remains the central theme of our current Medium-Term
Management Plan. Our Engineering Group is responsible forstrengthening the technological capabilities that are central toachieving that goal, speciﬁcally our capabilities in areas such asplanning, design, purchasing, construction, manufacturing, andresearch and development. The plants we deliver bring together
these technological capabilities, and to provide plants that satisfy
our customers, it is important that we improve upon them, alongwith the human abilities of those who are involved in associatedprocesses.
We operate in the dual business ﬁelds of the environment andenergy, and under the current Medium-Term Management Plan
we have identiﬁed, and are working toward, the targets that need
to be achieved by each department in order to enhance ourtechnological capabilities and foster the development ofprofessionals so that we can expand in those ﬁelds. This ﬁscal year
is the ﬁnal year of the current Medium-Term Management Plan,

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

Corporate Marketing Group
Business Administration Div.
Environmental Plant Div.
Energy Plant Div.

Head Ofﬁce

International Operations Div.
Engineering Group

Harima FactoryPlan overview
Planned site
Total ﬂoor space
Planned start of operations

At the Harima Factory site
New factory: About 19,000 m2(including associated facilities)
Supply Chain Lab: About 3,500 m2
December 2022

Management Center
Technology Center
Project Center
Engineering Center
Construction Center
Harima Factory

Harima Factory

TAKUMA 2020 ANNUAL REPORT

12The Takuma Group Network

The History of Takuma
1912(As of June 25, 2020; see Takumaʼs website for details.)
Takuma's business ofﬁces

Group companies in Japan

Group companies overseas

1912

Group companies in Japan
1 Head Ofﬁce (Amagasaki, Hyogo)
2 Osaka Ofﬁce (Osaka)
3 Tokyo Branch (Minato-ku, Tokyo)
4 Hokkaido Branch (Sapporo, Hokkaido)
5 Tohoku Branch (Sendai, Miyagi)
6 Chubu Branch (Nagoya, Aichi)
7 Kyushu Branch (Fukuoka)
8 Okinawa Branch (Ginowan, Okinawa)
9 Harima Factory (Takasago, Hyogo)
10 Taipei Branch (Taipei, Taiwan)

The ﬁrst “Takuma boiler” introduced by our
founder, Tsunekichi Takuma

1920
Tsunekichi Takuma

1 Nippon Thermoener Co., Ltd.

14 Iwate-Kenpoku Clean Co., Ltd.

2 Takuma Technos Co., Ltd.

15 Hitachinaka-Tokai High Trust Co., Ltd.

3 Hokkaido Sanitary Maintenance Co., Ltd.

16 Anan High Trust Co., Ltd.

4 Takuma Technos Hokkaido Co., Ltd.

17 Takuma Energy Co., Ltd.

5 Sunplant Co., Ltd.

18 Kurume High Trust Co., Ltd.

6 Takuma Engineering Co., Ltd.

19 Hokutan High Trust Co., Ltd.

7 Takuma System Control Co., Ltd.

20 Suwako High Trust Co., Ltd.

8 Dan-Takuma Technologies Inc.

21 Imabari High Trust Co., Ltd.

1930
Takuma Boiler ManufacturingCo., Ltd. founded1938 Company Motto instituted:“Service to the nation throughboiler manufacturing”

The venerable Tsunekichi Takuma
commended as one of the ten great
1930
inventors of Japan during the Meiji andTaisho periods (1868‒1926)

Amagasaki Factory

1940
1942 Operation begins at Harima Factory

9 Kyoritsu Setsubi Co., Ltd.

22 Energy Mate Co., Ltd.

10 Kankyo Sol-Tech Co., Ltd.

23 Kashihara High Trust Co., Ltd.

11 Takuma Plant Service Co., Ltd.

24 Techno Links Inc.

12 Nagaizumi High Trust Co., Ltd.

25 Tochigi High Trust Co., Ltd.

13 Fujisawa High Trust Co., Ltd.

26 Ecos Yonezawa Co., Ltd.

1949

Company listed on the Osaka andTokyo stock exchanges
Harima Factory under construction

1949

Bagasse ﬁred boiler, the ﬁrst product ofits kind in the industry, exported

1950

1953 Head Ofﬁce moved to Osakaʼs Kita-ku District
Business expanded into the environmental
1958 facility sectors, including waste incineration
and water treatment plants

25

2
8

4 3 4

14
8

26

1

1960
Operation begins at Kyoto Factory
1962 (Current: Nippon Thermoener
Co., Ltd. Kyoto Factory)

Japanʼs ﬁrst waste incineration plant1963 delivered
Sewerage treatment facility delivered
Japanʼs ﬁrst waste incineration plant

13

1970
1972 Company renamed Takuma Co., Ltd.

19

Bulk production begins on
1975 “Vacotin Heater”, the worldʼs ﬁrst
vacuum-type hot water heater

5

9 10

1986

3

6

1 6 7 11 17

New Company Motto instituted:
1992“Value Technology, Value People, Value the Earth”

2

22

23

1992 Taiwanʼs ﬁrst waste incineration plant delivered

1995 Amagasaki Head Ofﬁce Building completed
Japanʼs largest waste incineration
plant delivered
1998(Tokyo Shin-Koto Incineration Plant
Capacity:600t/d x 3)

1997 ISO9001 certiﬁcation obtained

16Group companies overseas
1 Taiden Environtech Co., Ltd.

1999 ISO14001 certiﬁcation obtained for Harima Factory

2010

2013

2009

Takumaʼs highest capacity(per unit) waste treatment
plant delivered in China(Beijing Gaoantun Waste to Energy Plant
Capacity:800t/d x 2)

2010

Waste treatment plant deliveredin Europe(U.K.)

Installation and operation of temporary
incinerators to process disaster waste
2013 from the Great East Japan Earthquake
2012

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

ご支給ください。
Waste Incineration Plant

2000

Takuma Hanyokikai Co., Ltd., a subsidiary
involved in the manufacture and sale of small
2005
boilers, and Ebara Boiler Co., Ltd., merged
and renamed Nippon Thermoener Co., Ltd.

2 Siam Takuma Co., Ltd.

2

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

1990

21

10 1

Vacotin Heater

1980

20

18

15

12
24

7

5

The Takuma Group Network / The History of Takuma

9

Takuma Solar Power Plant

2019

Lakeside EfW Plant

Order received for a 74,950 kW biomass
power plant (FIT-approved facility)
Biomass Power Plant

13

TAKUMA 2020 ANNUAL REPORTTAKUMA 2020 ANNUAL REPORT

14

Introduction to Takumaʼs Businesses

1. Environmental Plant Business(Related SDGs)

Primary equipment improvements

Municipal Solid Waste Treatment Plant Business
Since developing waste incineration technologies using
proprietary technology and delivering Japanʼs ﬁrst fully
continuous mechanical waste incineration plant in 1963,
Takuma has built more than 360 municipal solid waste
treatment plants in Japan. Subsequently, we haveintroduced numerous new technologies and achieved theNo. 1 share of plant deliveries in Japan. Today, we continue
to reﬁne our technologies and embrace the challenge of

operating to the highest possible standards.
Takuma will continue to contribute to stable regional
waste treatment by pursuing integrated initiatives ranging
from the construction of municipal solid waste treatment
plants to after-sales service for those facilities through abroad product line and service based on an extensive trackrecord as the industryʼs leading company.

Stoker-type incinerators

Stoker-type incinerators are the most common type of waste treatment plant in Japan, and they are a ﬂagship Takuma
product. Today, most incinerators operated by local governments throughout Japan use this treatment method, and Takuma
delivers secure, safe, stable, and highly efﬁcient waste treatment in response to customersʼ needs through advanced technology
and expertise based on its extensive track record.

Realizing stable combustion

Reducing environmental impacts

1 Stoker-type incinerators

2 Advanced ﬂue gas treatment

3 Surplus heat utilization equipment

We help reduce environmental impacts with advanced
ﬂue gas treatment technology that reliably removes
toxic substances from ﬂue gas and technology to
reduce the amount of ﬂy ash going to landﬁll.

High-temperature, high-pressure boilers
and other equipment maximize recoveryof the energy stored in waste to realize
high-efﬁciency power generation.

Steam

3 Surplus heat utilization equipment
Flue gas

BoilerEconomizer

1 Stoker-type incinerator

Incineration of solid waste｜
Stable combustion
Solid waste introduced into the incinerator
burns consistently at a temperature of
850 C or higher as it moves on the stoker(a step grate combustion equipment).
●

Denitriﬁcation
tower

2 Advanced ﬂue gas treatment

Flue gas treatment｜Reliable removal
Flue gas, ﬂowing out of the boiler andeconomizer, contains toxic substances
which are then reliably removed by aﬁlter-type dust collector and denitriﬁcation
tower, before being released from the stack.

Improving heat recovery

Increasing steam
turbine capacity

Increasing combustion
equipment efﬁciency

・Adding boilers to water
injection furnaces
・Expanding boilersʼ heattransfer area

Increasing generating
capacity by increasing
intake steam volume andoptimizing system design

Increasing combustion stability
and stabilizing evaporation amountand power generation output
through changes in furnace shape

Changing control systems

Increasing efﬁciency

Implementing
inverter-based speed
and airﬂow control

Increasing the
efﬁciency of motors
and other equipment

Long-term comprehensive operation business
The Long-term comprehensive operation business, inwhich customers enter into contracts covering both
operation and maintenance management for a term of 10
to 20 years, has become the most common approach in theindustry in recent years, for example in the form of DBO
projects.
We have currently collected plant operating andmaintenance management data for more than 10 municipal
solid waste treatment plants with, which we use
to provide real-time integrated management of plant and

Takumaʼs Solution Lab remote monitoring and operational support facility

Stack

Utilization of surplus heat |Effective utilization of energy from waste
Heat generated by the waste incineration process is recovered as steam by
the boiler and economizer and used to generate electricity at a steam
turbine generator. The recovered steam is also used as a heat source in theplant and nearby facilities, for example for hot water, heating, and cooling.

Methane gasiﬁcation facilities

Recently the Ministry of the Environment has been encouraging the introduction of Methane gasiﬁcation facilities for use with municipal
solid waste. Takuma is helping reduce incinerated waste volume and environmental impacts with its combined system of methane
fermentation and incineration for municipal solid waste, which recovers the maximum amount of energy possible from waste to realize
highly efﬁcient power generation. (The system received the New Energy Foundationʼs Chairman Award at the FY2014 New Energy Awards.)

equipment operating status.
Additionally, we operate Solution Lab to further enhance
our remote monitoring and operational support functions
for existing plants. Our Solution Lab provides remotemonitoring and operational support by monitoring plantstatus and operating conditions 24 hours a day. It utilizes
the latest Information and Communications Technologies(ICT), including the IoT, big data, and AI, to provide
optimized solutions for customers and support to help
ensure safer, more secure plant operation.

Introduction to Takumaʼs Businesses

Filter-type dust
collector

Energy-saving Measures

Realizing high efﬁciency power generation

Stoker-type incinerators realize stable combustionof a variety of waste thanks to proprietary stoker
technology, state-of-the-art instrumentation, andadvanced automatic combustion control.

Steam turbine
generator

Example of a Primary Equipment Improvement Project
Energy Recovery Measures

Plant construction●

70%* of all Japanese municipal solid waste treatment plants, which comprise a key type of infrastructure, have been operating for atleast 15 years, and demand for updating plants and extending their service life is growing due to their aging. Using the advanced heatutilization and energy-saving technologies we have developed as a boiler and environmental plant manufacturer, Takuma helps extend
plant service lives and reduce CO2 emissions through high-added-value primary equipment improvement projects. *According toresearch conducted by the Ministry of the Environment in 2018 and reported in “Municipal Solid Waste Emissions and Disposal.”

Optimal solutions that meet customersʼ needs

Safe, secure operation and efﬁcient management

Human resources and technological development

We provide high-quality solutions that have been
optimized for customers based on data obtained fromremote monitoring and operational support by identifying
and analyzing issues related to plant operations using thelatest Information and Communications Technologies (ICT).
We also create new value in the form of distinctive
technologies and services so that we can respond to thesocial challenges that will face society in the future.

We provide even safer, more secure operationand more efﬁcient management for customers
through remote monitoring and operational
support functions that utilize the latest ICT.
In the event of the unforeseen circumstances,
our highly experienced engineering staff canprovide precisely targeted guidance tocustomer sites 24 hours a day.

In addition to ICT, facilitating the growth ofthe people involved in operations is essential
in order to ensure plants to be operated in astable manner over the long term.
Solution Lab improves workersʼ technicalskills through highly effective education andtraining using operational training
simulators.

PlantsSolution Lab
serverCollecting data

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

15

TAKUMA 2020 ANNUAL REPORT

Replacing boiler tubes

DeliveryamountCombustion
statusPower generation
statusChemicals/
analysis

Inspection
history

Maintenancehistory

Data analysis andvisualization

Proposing
improvements

・Combustion status and evaluation
・Equipment performance diagnostics
・Optimization of operation plans
・Equipment service life forecasts

TAKUMA 2020 ANNUAL REPORT

16

1.Environmental Plant Business(Related SDGs)

Water Treatment Plant Business●

Takuma has delivered numerous systems, particularly in relation to technologies for advanced treatment of wastewater, in aneffort to help conserve the aquatic environment.
The recent trend is for plants to be called upon not only to purify water, but also to reduce power use by treatment
equipment and create energy from sewage sludge. In an effort to meet these requirements, Takuma has been focused on
developing a step grate stoker type sewage sludge incineration and power generation system and implemented technologies
using waste heat from the incineration process to generate electricity.
Going forward, we will continue to help conserve the aquatic environment by supplying products that meet the needs of ourtimes.

Measures undertaken to improve the quality of public
water sources and the need to reuse treated sewage are
spurring demand for more advanced water treatment.
Upﬂow moving-bed sand ﬁltration systems (Uniﬂow Sand
Filter), which eliminate suspended solids (SSs) from water,
are used in a variety of ﬁelds, including in ﬁnal processing
at sewage treatment plants and in pre-processing to remove
solids at water plants. This particular model is a long-selling
product featuring proven water puriﬁcation technology ofWater Treatment Plants

Incoming
water path

Water treatment plant equipment ﬂow
Sewage intake

Advanced treatment facility【Principal equipment】・Upﬂow moving-bed sand ﬁltration systems (Uniﬂow Sand Filter)

Incoming
water pipe
Catchmentwater troughPuriﬁcation air
Catchmentwater trough

Raw
water

【Principal equipment】

Filteredwater
Filter layer

Sand washer

・Aeration systems •Low power agitator (Bio Blade Mix)

Pre-processing
equipment
Initial settling pond

Final settling pond

Filter sand washing cycle

Filtered water

Advanced treatment facilities

Reaction tank facilities

which we have delivered more than 2,700 units in Japan. A
design that combines ﬁltration treatment with continuous
backwashing of the ﬁltration sand ensures stable operationand exceptional maintainability.
The product line includes high-speed models withdouble or triple the ﬁltration speed of the standard model
as well as denitrifying and dephosphorizing variants thatadd functionality for eliminating nitrogen and phosphorus
to standard SS elimination functionality.

Air-lift pump

Puriﬁedwastewater

Sand ﬁlter

Primary wash
Sand is moved toward the top of the ﬁlter while
being vigorously stirred inside the air-lift pump.
Secondary wash
Sand is washed by counter-ﬂowing ﬁlteredwater as it falls inside the sand washer.

Discharge

Anaerobic Anoxictank tank

DisinfectiontankAnoxic Aerobic
tank
tank
Aeration panel

Crude sludge●

Drawn-off sludge

Sludge incinerator【Principal equipment】・Step grate stoker type sewage sludge incineration and power generation

system (step grate stoker furnace and innovative step grate stoker furnace)

Sludge treatment

Power generation equipment

Generator

Steam produced by the boiler is used to generate electricity.

Heat produced by incinerating sludge isrecovered and used to produce steam.

Dust is removed fromﬂue gas.

Introduction to Takumaʼs Businesses

Because it contains a large amount of energy, sludge generated during the sewage treatment process has been attracting attention
in recent years as a biomass resource. We are taking advantage of our core incineration and boiler technologies to make effective useof the energy contained in sludge by using it as a fuel to generate electricity. Following the systemʼs selection for inclusion in the
Breakthrough by Dynamic Approach in Sewage High Technology Project (B-DASH) by the Ministry of Land, Infrastructure,
Transport and Tourism (Japan) in FY2013, we have received orders for the system from the cities of Tokyo and Sapporo.

Incinerator
Digester tanks

Air-lift pump
Filter bed surface

Excess sludge

Aerobic tank

The sand returns to the ﬁlter layer surface
and slowly falls while capturing SSs.

Filter layer

SludgeAir
Flue gas
Steam

Sludge treatment facility

Sludge incinerator
Binary generator●

Dust collector

Sludge treatment facility【Principal equipment】

Cleaning nozzle•Rotating drum-type concentrator
A rotating drum-type concentrator consists of a drum-shaped
screen consisting of metal wedge wire that separates andconcentrates solid and liquid components from coagulated
sludge as the drum rotates. Following solid-liquid separation,
sludge is transported to the exit side of the system as it isconcentrated and pushed by spiral-shaped vanes on the insideof the rotating drum. Thanks to a simple design whose
operation hinges on a slowly rotating drum screen, the system
uses less power than its conventional counterparts, yielding
high energy savings.

Drum screen

Concentrated
sludgeSeparator
liquidSludge fed into
the machine

Dryer

TAKUMA 2020 ANNUAL REPORTStep grate stoker
furnace

Steam from a steam turbine generator
is used to dry dehydrated sludge.

Combustion

17

Waste heatboilerSteam turbine
generator

Photograph taken
inside the furnace

Ash bunker

Combustion air fan
N2O, a gas whose greenhouse effect is
298 times more pronounced than that of
CO2, is broken down by high-temperature
combustion at 900 C to 1,100 C.

Flue gas
treatment tower

Induced draft fan
After ﬂue gas is cooled with water mist, toxic substances such as sulfur
oxide are removed, and the gas is released into the atmosphere.

TAKUMA 2020 ANNUAL REPORT

18

1.Environmental Plant Business

Ine Town

Project Story

Kyotango City

Building a regional Sound Material-Cycle Society with advanced biomass utilization technologies

Clean Center construction project by the city of Miyazu
and the towns of Ine and Yosano●

Miyazu-Yoza
Clean Center

YosanoTown

MiyazuCity

Construction

MiyazuCity

Facility overview

Operator

Miyazu Yoza Union Environment

Project type

DBO (Design, Build, Operate)

Facility name

Miyazu-Yoza Clean Center

Project period

Construction phase: April 2016 to June 2020 Operational phase: July 2020 to February 2040

Miyazu-Yoza Clean Center is a wide-area waste treatment facility operated by a city (Miyazu) and two towns (Ine andYosano) in northern Kyoto Prefecture. The complex, which consists of an energy recovery-type waste treatment facility (waste
incineration + methane gasiﬁcation) and a material recycling facility, incorporates the latest biomass technologies and willcontribute to the realization of a Sound Material-Cycle Society.

(Waste incineration facility)
The waste incineration facility uses
high-temperature heat from the waste
incineration process to make hot water.

(garbage, moist paper)(Methane gasiﬁcation facility)
The methane gasiﬁcation facility recovers
methane gas released by waste and uses
it to generate electricity. The heat fromthat process can be reused.

Residue offermentation

Material recycling facility
The material recycling facility sorts and recycles waste such as noncombustible
refuse, plastic containers and packaging, and cans. Sorting helps extend the service
life of ﬁnal disposal site by reducing the volume of waste to be landﬁlled.

Crusherand sorter

Other waste(sorting residue)
Incinerator

Methane gas
Methanefermentation Gas generator
tank

Flue gas
Flue gas
treatment system

Stack

19

TAKUMA 2020 ANNUAL REPORT

July 2018 (heavy rainfall)

September 2018

April 2019

October 2019

Methane gasiﬁcation facilities

The complex consists of an energy recovery-type waste treatment facility (waste incineration +methane gasiﬁcation) and a material recycling facility. The methane gasiﬁcation facility ferments
waste, paper, and other material that makes up the combustible waste stream to produce
methane, which is then used to run a gas generator, allowing it to be recovered as electricalenergy. Electricity that remains after certain local load requirements are met can be sold back to
the grid.
In designing the methane gasiﬁcation facility, we worked hard to precisely apply the expertise
we have gained through past experience and to incorporate the latest information about otherstate-of-the-art facilities into the plant after a careful vetting process.
It is our hope that in addition to its basic role of treating waste in a hygienic manner, the plant
will contribute to material recycling and to the effective use of biomass energy.

Section 2, Environmental Design Dept. 3
Engineering Center
Takuma Co., Ltd.

Construction sitePowergeneration

Message from the engineering coordinator

Hiroshi Kogita●

Similarly, in planning the facility, we identiﬁed three designconcepts: nature, history, and people. In addition to adopting a designthat blends into the areaʼs rich natural environment, we incorporated
the distinguishing shapes of the regionʼs traditional arts and crafts into
the design, along with features that express gentle hospitality towardvisitors, for example through the natural warmth of wood.
As it turned out, the construction phase posed many unexpectedchallenges, including the discovery of underground obstructions andﬂooding in a waste pit due to heavy rainfall. Nonetheless, we wereable to overcome these obstacles to complete a facility whose
advanced equipment is unique in Japan.

Introduction to Takumaʼs Businesses

Energy recovery-type waste treatment facility

Electricity
company

Combustible
waste
Organic waste

This project, through which the city of Miyazu and the towns of Ineand Yosano are seeking to realize a safe and hygienic living
environment, was about more than just fulﬁlling the basic role of awaste treatment facility. Reﬂecting its belief that the project is one inwhich a new future can be pioneered through advanced biomass
utilization technologies, the Takuma Group sought to create a modelcase demonstrating how a project could help create a Sound
Material-Cycle Society. In undertaking the project, we identiﬁed threecore concepts: providing peace of mind and vitality to the region,
protecting the environment and coexisting with nature, andsupporting a sound material cycle into the future.

Message from the construction coordinator

Takahiro Kimura
Section 2, Civil &Architectural Engineering Dept.
Construction Center
Takuma Co., Ltd.

The facilityʼs location next to Yoza-Amanohashidate IC about 10 minutes by car from Amanohashidate,
one of the three most famous scenic spots in Japan, makes it a picturesque destination in its own right.
Although the greatest concern when construction began in January 2017 was delays caused byaccumulated snowfall during the winter, the project was blessed with a comparatively mild winter.
However, in addition to boulders and other underground obstructions, a variety of problems, including
inﬂows of muddy water caused by heavy rainfall in nearby mountainous valleys, impacted theconstruction schedule and led to a delay of about 11 months after discussions with the customer.
We were able to overcome the challenges with the customer in cooperation with a local generalcontractor with whom we shared the construction work, sharing information about problems arising ineach scope of the plant construction and the civil work, and revamping the schedule.
Our hope is that the facility, which was completed thanks to the understanding and cooperation of thecustomer and local residents, will continue to operate and develop as a site that can contribute to theregion as part of Takumaʼs comprehensive operation business.

TAKUMA 2020 ANNUAL REPORT

20

Introduction to Takumaʼs Businesses

2.Energy Plant Business(Related SDGs)

For more than 100 years, Takuma has delivered numerous boilers and plants of various types and speciﬁcations, including foruse in power, shipping, and air-conditioning applications, while accumulating extensive experience and expertise as a pioneerof the boiler industry. We will continue to help realize a sustainable society while working to resolve customersʼ issues as well
as social problems through our business activities.

Products and services
Biomass Power Plants
These plants produce heat and power from a variety of biomass fuels, including wood fuels such as wood chips and bark, PKS, and bagasse.

Contributing to society through business activities
Promoting renewable energy
We are helping promote renewable energy
by supplying biomass power plants.

Making effective use of unutilized
resources
We are helping realize a Sound Material-Cycle
Society by supplying plants that can efﬁciently
burn fuels and waste products that have goneunderutilized in the past.

Preserving the environment:water, air, and mountain forests
We are helping preserve the global
environment by supplying plants thatutilize appropriate technologies andsystems to protect the environment.

Four Advantages
Advantage

1 Ability to burn a wide range of fuels

These plants can effectively use a variety of substances that have been difﬁcult to use in the past as fuel.

Reducing CO2 emissions
We are helping realize a low-carbon society
by supplying high-efﬁciency power plants.

Value provided by Takumaʼs Energy Plant Business

Advantage

Wood chips

Bark

Wood pellets

PKS

BagasseLivestock (poultry)
manureRice husks

Corn residue

etc.

2 Custom designs

From our four combustion furnace types, we select the model that best suits each customer's plan and design a plant accordingly.

２．After-sales service

We supply plants that combust a variety of fuels
and waste in a stable manner over extended
periods of time based on our extensive trackrecord of deliveries.

We offer service designed to ensure that plants canoperate in a stable manner over the long term
based on our advanced technologies and extensive
experience.

Biomass power plants

MaintenanceWe supply power plants that can utilize a variety ofbiomass fuels to operate in a stable manner over extended
periods of time, including unused lumber, lumber waste,
construction waste, PKS (Palm kernel shells), pellets,
livestock manure, bagasse, and paper sludge.

We offer proposals for, and carry out, plans forperiodic inspections and maintenance, functional
improvements, and preventive maintenance inorder to maintain high plant performance andprevent unplanned stoppages.

Industrial waste incineration andpower generation facilities

O&M*

We supply facilities that can recover heat in a highly
efﬁcient manner, including by using it to generate
electricity, after burning even difﬁcult-to-treat waste
in an appropriate manner.

We accept orders for operation, maintenance, andmanagement on 20-year terms to reduce workload
and life cycle costs so that customers can maximize
the proﬁtability of their businesses.

Introduction to Takumaʼs Businesses

1．Plant engineering

Step grate stoker

Advantage

Traveling stoker

Bubbling ﬂuidized bed

Circulating ﬂuidized bed

3 Stable operation over the long term

We supply plants that can operate in a stable manner for decades with the least number of breakdowns or sudden stoppages by designing them basedon our extensive experience and expertise and by maintaining them in an optimal manner, even when biomass with inconsistent properties is used.

Advantage

4 High-efﬁciency, energy-saving performance

We supply plants characterized by high transmission end efﬁciency and boiler efﬁciency by selecting the optimal
combustion method and boiler for each installation and by reducing auxiliary power and the unburnt portion.

* O&M: Operation & Maintenance

21

TAKUMA 2020 ANNUAL REPORTTAKUMA 2020 ANNUAL REPORT

22

2.Energy Plant Business

Construction

Project Story

Supporting continuity of the renewable energy industry with a biomass power plant

Biomass power plant construction project in Toyohashi, Aichi Prefecture

SALA e POWER Co., Ltd.

Project name

SALA e POWER Biomass Power
Plant Construction ProjectPower output

22,100 kW

capacity

150 million kWh per year
(Equivalent to the power used byabout 40,000 households)

Principal fuel

PKS, wood fuel, wood pellets

Completion dateJune 2019

The customer, a wholly owned subsidiary of SALA Energy Co., Ltd., which isa central company in the SALA Group and its array of energy-oriented
businesses, was established to operate a wood biomass power plant business.
The biomass power plant that we delivered in this project uses PKS imported
from Southeast Asia as its primary fuel, and it uses the heat generated byburning a mixture of chips produced from unused lumber and other woodfrom Okumikawa in Aichi Prefecture and the Enshu region of Shizuoka
Prefecture to generate electricity.
In addition to providing a clean, stable source of power that also helps
reduce greenhouse gases regardless of the weather, the facility contributes tothe appropriate protection of the regionʼs woodland resources by working
closely with local communities.

Message from the engineering coordinator

Construction site

Stakeholder message

Ryoji Higuchi

Mr. Naohiro Fujita

Section 2, Energy Engineering Dept. 1
Project Center
Takuma Co., Ltd.

President
SALA e POWER Co., Ltd.

I currently work in Takumaʼs engineering oversight department, where I am involved with boiler plant planningand design.
Since the project represents SALA e POWERʼs ﬁrst purchase of a Takuma boiler plant, we conducted a series ofhighly detailed meetings, starting during the design phase. I believe that we were able to construct a plant that would
satisfy the customer as a result of the unity and effort by each and every person who was involved with the project.
Going forward, I look forward to contributing to plant planning and design so that we can leverage Takumaʼsexperience and technology to better meet customersʼ needs.

23●

TAKUMA 2020 ANNUAL REPORT

began. The schedule was extremely tight for a plant of this scale,
but we were able to transfer the facility to the customer after
completing it without incident (while setting a record of about
160,000 accident-free hours). The projectʼs successful completionis entirely due to the customerʼs cooperation and the hard work of
the cumulative total of 20,900 employees of Takuma and ofpartner companies who were involved with the plantʼs
construction.
We look forward to taking advantage of the experience gained
from this project to build the kind of plants that are required by ourchanging times.
Introduction to Takumaʼs Businesses

CustomerThis plant, which was constructed on a site of about 30,000
square meters on Mikawa Harbor in the Shinnishihama-cho districtof the city of Toyohashi, is one of the few wood biomass power
plants in Japan with a generating capacity of 150 million kWh ayear, equivalent to the power used by 40,000 households. It uses
PKS and lumber from forest thinning in Japan as fuel. Reﬂecting
our belief that the project will play a key role in the adoption ofrenewable energy in Japan, we emphasized an early start ofoperations and thorough safety management in its construction.
Construction began in April 2018, and commissioning began in
April 2019. Work was completed in June 2019, 15 months after it

The energy industry has embarked in an era of consolidation and borderless operations as a result of an across-the-board
liberalization of the power and gas retail sector. The SALA Group has responded to these changes by augmenting its natural
gas and propane supply operations with power retail and generation businesses. We believe that by putting in place structuresthat allow us to carry out integrated operations extending from power generation to power sales, we will be able to earn thetrust, and meet the expectations, of regional society as well as of our customers.
We look forward to supplying clean, stable renewable energy to the region in a way that also helps reduce greenhouse gases
by operating this biomass power plant built by Takuma and to deepen our partnership with local communities while bringing
innovation to the infrastructure that underpins society by making effective use of unused lumber from nearby regions.

TAKUMA 2020 ANNUAL REPORT

24

Introduction to Takumaʼs Businesses

3.Overseas Business(Related SDGs)

Our overseas business began in 1949, when we exported
the industryʼs ﬁrst bagasse-ﬁred boiler to Taiwan. During thesubsequent 70 years, we have delivered more than 850 boilers
to overseas customers. The combustion technologies we havedeveloped since our founding can accommodate not only
fossil fuels, but also special fuels such as bagasse, palm, andwood, and we have both supported local industry by providing
a source of power for manufacturing facilities in various
countries and promoted effective use of renewable resources.
We have also delivered 16 waste treatment plants tocustomers in the U.S.A., Taiwan, China, South Korea, andEngland. Takuma technology allows these facilities toincinerate a variety of waste products. We help thesecustomers achieve stable operation over the long term byproviding optimal solutions for waste streams whose
properties vary by country and region.
In recent years, biomass boilers have received new

attention from the dual standpoints of global warming
prevention and energy policy based on internationalframeworks such as the Paris Agreement, and there is now amajor trend toward using biomass as a source of power atscale. At the same time, the appropriate treatment of waste is
becoming a particularly pressing issue in developing nations.
The path to solutions is by no means a simple one as a resultof the complexities of environmental awareness, legal
structures, budgets, and other considerations, but there is no
doubt that plants provided by Takuma make a valuable
contribution to achieve the Sustainable Development Goals(SDGs) in a number of areas, including by providing“affordable and clean energy”, aiding in the development of“sustainable cities and communities,” and so on. We willcontinue to harness such products, which are the embodimentof Takumaʼs technologies, to support customersʼ businesses
while contributing to international society.

Deliveries to overseas markets

Founding

856 boilers(Including 380 biomass boilers)
16 waste treatment plants

Takuma exports the industryʼs
Takuma delivers the ﬁrst waste
ﬁrst bagasse-ﬁred boiler to Taiwan. treatment plant in its area in Taiwan.

1986
1938

1949

2009

2010

Kenana Sugar Co., Ltd. (Sudan)

FacilityCompleted

Biomass boiler plant (8 units)
6 units in 1981, 1 unit in March 1999,
1 unit in January 2004
Combustion furnace type Traveling stoker
Steam conditions
113.4 tons per hour 3.2 MPaG 360 C 6 units(normal operation)
136 tons per hour 3.1 MPaG 370 C 2 units
Fuel
BagasseThis bagasse-ﬁred boiler plant was delivered to a customer in
Sudan. Kenana Sugar, which was established in 1976, is a large
company that manages integrated operations extending fromsugarcane cultivation to sugar reﬁning. The project was part of anational effort to take advantage of water from the Nile River and theareaʼs extensive insolation to greenify the region and transform it intoa grain-growing area.
Takuma contributed to regional development by delivering six
boilers in 1981, followed by one boiler each in 1999 and 2004, while
contending with challenges including the projectʼs scale, demanding

requirements, a completely different culture, and a harsh work
environment in distant Africa during a time when communications
were limited. A number of national presidents and other distinguishedguests from various countries attended an elaborate dedication
ceremony following the projectʼs completion in 1981.

A 10-Sudan-pound note featuring
a depiction of Kenana Sugar tocommemorate the facilityʼs completion

Lakeside Energy from Waste Ltd. (UK)1992

Takuma delivers its ﬁrst overseas
waste treatment plant in the U.S.A.

FacilityCompleted
Treatment type
Treatment capacity
Power output

Takuma delivers a waste
treatment plant in England.

Our Achievements

We delivered this waste incineration power plant in 2010
to a customer in Slough, a suburb of London, England. The
companyʼs website introduces the facility as a plant that islarge enough to supply electricity to power all 86,267
households in the area by processing 450,000 tons of waste
to generate 306 GWh of power every year.
Overseas, private-sector companies are often responsible

Waste incineration power plant
January 2010
Step grate stoker
1,370 tons per day (685 tons per 24 hours 2 units)
36,650 kW (rated)

Introduction to Takumaʼs Businesses

Takuma delivers a waste treatment
plant with one of the highest capacities
per boiler (800 tons per day 2 boilers)
in China.

for waste treatment, including municipal solid waste, atfacilities such as this one. Durable plants that can operate athigh efﬁciency in a stable manner over the long term areessential in order to improve the proﬁtability of revenue
such as processing fees and power sales when such plants
are operated as a business, and this facility has earned highpraise in this regard.

Message

TSM Group (Thailand)

嘉義縣鹿草垃圾焚化廠

TSM Power Co., Ltd.
Thai Udonthani Power Co., Ltd.

Facility

Treatment capacity

Waste incineration
power plant

900 tons per day(450 tons per 24 hours 2 units)

Facility

Steam conditions (normal operation)

Biomass boiler plant (4 units)

CompletedPower output

150 tons per hour 4.2 MPaG 450 C 2 units
170 tons per hour 4.2 MPaG 450 C 2 units

December 2001

28,000 kW (rated)

Completed

Treatment type2 units in November 2012,
2 units in January 2019

Step grate stoker

Combustion furnace type
Traveling stoker

25

Yasuo Takamatsu

LuTsao Incineration Plant, ChaiYi County (Taiwan)

TAKUMA 2020 ANNUAL REPORT

FuelBagasse

Deputy Executive Manager
International Division
Takuma Co., Ltd.

The eight boilers we have delivered to Kenana Sugar continue to operate today, close to 40 years after theﬁrst units were delivered. Ten years has passed since we delivered the facility we completed in 2010 for
Lakeside EfW, and that plant, too, continues to operate smoothly and earn high praise from the customer as
Europeʼs No. 1 EfW plant. Our products contribute to our customersʼ businesses and to society by operating
in a stable manner over the long term, and their performance is our greatest pride. Although the overseas
business poses unique challenges that must be met before a plant can be delivered, I look forward tocontinuing our initiatives in this area as a bridge to the future, based on the willingness to embrace difﬁcult
challenges that we inherit from those who came before us and the experience we have accumulated to date.

TAKUMA 2020 ANNUAL REPORT

26

Introduction to Takumaʼs Businesses

Main Recent Projects
The following are the main plants supplied by Takuma during FY2019.

Municipal Solid Waste Treatment Plant Business

Water Treatment Plant Business

Energy Plant BusinessPrimary equipment improvements

Yamaguchi City Incineration Plant
Project nameYamaguchi City Incineration Plant
Primary Equipment Improvement Project

Capacity
Incineration facility: 220 tons per day (110 tons per 24 hours 2 units)
Power output: 3,600 kW

Tokyo Kasai Water Reclamation Center

CEPO Handa Biomass Power Co., Ltd.

SALA e POWER Co., Ltd.

Aoki Environmental Enterprise Co., Ltd.

Project name

Project name

Project name

Project nameTokyo Kasai Water Reclamation Center Sludge
Concentration Tank No. 4
Machinery and Equipment Improvement Project

CEPO Handa Biomass Power Plant
Construction Project

SALA e POWER
Biomass Power Plant Construction Project

Waste Incineration Power Plant
Construction Project

Equipment capacity and speciﬁcations

Equipment capacity and speciﬁcations

Equipment capacity and speciﬁcations

Equipment capacity and speciﬁcations

Project overview: Update work on a sludge scraper
Type: Center-drive post type
Capacity: φ28,000 mm 1 unit

Fuel: PKS, wood fuelSteam conditions (normal operation):
190 tons per hour 6.2 MPaG 480 C
Power output: 50,000 kW

Fuel: PKS, wood fuel, wood pellets
Steam conditions (normal operation):
85 tons per hour 6.0 MPaG 480 C
Power output: 22,100 kW

Treated waste type: Industrial waste
Treatment capacity: 93.6 tons per day
Power output: 1,050 kW

Location

Location

Location

Location

Niigata Prefecture

Aichi Prefecture

Aichi PrefectureTokyo

Location
Yamaguchi Prefecture
Introduction to Takumaʼs Businesses

Hayashi Plywood Industrial Co., Ltd.
Project name
Biomass Power Plant Construction Project
Equipment capacity and speciﬁcations
Fuel: Wood fuelSteam conditions (normal operation):
31 tons per hour 5.98 MPaG 415 C
Power output: 6,800 kW

Uji City Higashiuji Sewage

Osaka City Hokko Landﬁll site

Kochi Prefecture Urado Bay Eastern

SARA Inc.

Treatment Plant

Project nameBasin Takasu Sewage Treatment Plant

Project name

Uji City Higashiuji Sewage Treatment Plant
Water Treatment Equipment Project No. 17

Hokko Landﬁll site
Wastewater Treatment Facility
Restoration Work (Phase 2)

Equipment capacity and speciﬁcations

Equipment capacity and speciﬁcations

Project overview: Modiﬁcation to early sedimentation,
reaction tank, ﬁnal sedimentation,
disinfection, and water equipment
Capacity treatment volume: 3,650 m3 per day
Treatment method:
Biological nitrogen removal with agglomerating agent
Speciﬁcations: Aeration system, sludge scraper, etc.

Project overview: Work to restore operation to a wastewater
treatment facility that was damaged
by Typhoon 21 in September 2018
Capacity treatment volume: 3,000 m3 per hour
Treatment method:
Coagulating sedimentation
Speciﬁcations: Turbid water treatment system

Location

Location

Kyoto Prefecture

Osaka Prefecture

Project name27

TAKUMA 2020 ANNUAL REPORT

Project nameUrado Bay Eastern Basin Takasu Sewage
Treatment Plant
Sludge Treatment System Construction Part 15

Equipment capacity and speciﬁcations
Project overview: Dehydrator expansion work
Type: Pressurized screw press dehydrator
Treatment capacity: 225 kg-DS per hour

Location

Location
Kyoto Prefecture

Waste Gas Puriﬁcation System
Installation Project
Equipment capacity and speciﬁcations
Equipment overview: Equipment to supply CO2
Waste gas source: Incineration waste gas frombiomass power plant
CO2 supply volume: 2,750 kg of CO2 per hour
Location
Okayama Prefecture

Kochi Prefecture

TAKUMA 2020 ANNUAL REPORT28

G OVERNANCE ーGovernance Initiativesー
Corporate GovernanceCorporate Governance●

Basic policy on corporate governanceIn order to safeguard and steadily increase Takumaʼs
corporate value over the long term, it is essential not only
to ensure the development of the companyʼs businesses,
but also to clearly deﬁne governance in corporate
operations-that is, to ensure that shareholdersʼ oversight ofoperations is carried out appropriately and that ofﬁcers

Executive Proﬁles: Directors●

Board of Directors●

As of June 25, 2020, 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 wereoutside directors). The Board of Directors meets regularly once amonth 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 theexecution of the directorsʼ duties.

●

1
7

8

2

10

11
9

1

4

5

2

3

3
4
5
6

Managing Executive Ofﬁcer
Takashi Manabe
Ryoji Tani
Norito Uchiyama
29

Mitsuaki Adachi
Akira Taguchi

TAKUMA 2020 ANNUAL REPORT

Representative Director
President and Chief
Executive Ofﬁcer

Takaaki Kato

Director
Chairman Executive Ofﬁcer

Kengo Numata

Director
Executive Vice President

Tsuyohito Nishiyama
Director
Senior Managing
Executive Ofﬁcer

Hideki Takeguchi
Director
Senior Managing
Executive Ofﬁcer

Yasushi Enomoto

7

Director(Audit & Supervisory
Committee Member)

8

Outside Director(Audit & Supervisory
Committee Member)

9

Outside Director(Audit & Supervisory
Committee Member)

Osamu Iwahashi
Tomomi Fujita

Including the following
outside directors:

11 (10 men and 1 woman)

4 (3 men and 1 woman)

In order to accelerate management decision-making and clarify
where management responsibilities are placed, we have adopted
an executive ofﬁcer system in which we appoint executive ofﬁcers
who are entrusted with the responsibility of executing ourbusiness activities. As of June 25, 2020, there were 16 executiveofﬁcers (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 anorganization 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.

ReportingCommittee Member)

Appointment
and removal

Auditing of accounts

Tetsuya Kaneko

Outside Director(Audit & Supervisory
Committee Member)

Koji Tanaka
Director
Executive Ofﬁcer

ReportingAccounting
Auditors

Reporting

Reporting andstatement of views

GeneralMeetingof
Shareholders Appointment

Cooperation
Assistance

Audit &
Supervisory
Committeeʼs
Ofﬁce

Audit &
Supervisory
Committee

Cooperation

Nominating &Committee

Keiji Nakamura
Hiroshi Oishi

ReportingAppointment
and removal

Audit & Supervisory Committeeʼs Ofﬁce

Takuma has established an Audit & Supervisory CommitteeʼsOfﬁce to help carry out the committeeʼs work.
●

Nominating & Compensation Advisory Committee

To augment the above structures, we have established a
Nominating & Compensation Advisory Committee comprised ofindependent ofﬁcers, representative directors, and the ofﬁcer incharge of human resources. The purpose of the committee, amajority of whose membership consists of independent outside
directors, is to increase transparency and objectivity in theselection of candidates for director and executive ofﬁcer positions
and in the determination of the compensation and other terms so
as to enhance the oversight function of the Board of Directors.

Variouscommittees

Reporting

Auditing andCompensation
supervision
Advisory
Recommendations

Board ofDirectors●

Education, instructions, and reporting
ReportingCompliance& CSR
Promotion
Division

Reporting

Auditing

and removal

Executive Ofﬁcer
Hidetoshi Tomita
Norio Maeda
Kunio Hamada

An Audit & Supervisory Committee that consists of ﬁve members,of whom four are outside directors, is responsible for accounting andoperational audits. Members of the committee attend important
meetings, including those of the Board of Directors and theCommittee of Executive Ofﬁcers, and they strive to understand andobserve the status of business execution in a timely and appropriatemanner. Drawing on their professional background and experience,
they express their opinions as necessary from an objective
perspective, and they conduct strict auditing of the businessexecution performed by the directors. To facilitate the effectivenessof audits carried out by the Audit & Supervisory Committee, therepresentative director holds regular meetings with committee
members to ensure good communication.

Executive Ofﬁcers

Yoshiaki Ito

Director
10 Outside(Audit & Supervisory11

Directors

Audit & Supervisory Committee

Consultations

Discussion
and reporting

Selection, dismissal, and supervisionCorporate Governance

6

Hiroaki Nanjo

carry out their operational responsibilities by means of aprocess that is clear, rational, efﬁcient, and legallycompliant. For that reason, we believe that understanding
the Corporate Governance Code and putting it into practicein an autonomous and systematic manner are top-priority
management issues.

ReportingObserving and guidanceInternal auditing

Internal Audit
Department

Committee
of Executive Discussion of and reportingon important matters
Representative Ofﬁcers(Deliberation
Directorof importantIssuance of instructions andmatters)

Internal auditing

Divisionsandcenters

Execution of

Executive responsibilities
communication of information Ofﬁcers

Appointment
and removal

Corporate governance structure(As of June 25, 2020)

TAKUMA 2020 ANNUAL REPORT30

Corporate GovernanceRisk Management StructureInternal Control
Takuma has adopted a Basic Policy for Establishment ofan 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 tochanging circumstances.
Working towards thorough compliance, Takuma built acompliance promotion organization in FY2006 in order tocontinuously implement enlightenment and educational
activities that make corporate ethics, related laws andordinances, and internal rules fully understood. To control
the danger of loss, we have also prepared a “RiskManagement Code” that determines the person in charge ofeach risk, and we set up our risk management organizationaccording to that Code. When the unexpected occurs,

emergency headquarters are established with the company
president as the director in charge of risk management, andan organization is put in place in order to minimize andprevent further damage through prompt action.
Internal control, constructed and evaluated in order toreport on and prevent misstatements in our ﬁnancial
reporting, is based on the Financial Instruments andExchange Act. This internal control on ﬁnancial reportingfor the Group has resulted in reports that indicate thissystem has been effective.
In this way, we will continue to work in the future toensure thorough compliance while carrying out businessproperly and efﬁciently while also deepening risk
management.

Compliance & CSR Promotion Structure●

Basic approach

Regular meetings are held once a year. The person in charge ofpromotion receives reports on the status of compliance and CSR
promotion company-wide, as well as on the status of theimplementation of compliance and CSR promotion education for the
past year, etc., and participants deliberate on a promotion plan for thecurrent ﬁscal year.
●

Departmental meetings

Promotion members convene departmental meetings once a quarter,with educational training aiming at the permeation of compliance andCSR in each department. After departmental meetings, promotion
members implement compliance and CSR promotion education in theirrespective departments using training materials or in-house
educational materials and report the results to the Secretariat.
●

Risk refers to all phenomena that interfere with the Groupʼs ability to achieve its business objectives or cause losses
or harm to the interests of stakeholders.
The Takuma Group practices risk management with the goal of increasing its corporate value by working tomaximize returns while minimizing the negative impacts of risk.

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

Board ofDirectors

Reporting

Request for decision/
reportingPresident
Committee of
Executive Ofﬁcers

Takuma Group
Coordinating Committee forCompliance & CSR Promotion

Report oninternal control
evaluation
concerning
ﬁnancial
reporting

Project risk
DBO Project risk
DBO Project operation, maintenanceand management risk

Request for decision/
reporting

Evaluation

Committee of Executive Ofﬁcers

Divisions and centers

Risk Management Code, Crisis Management Code
Project Risk Management CodeDBO Project Risk Management CodeRisk Management Code for DBO Project Operation,
Maintenance and Management

Reporting

Reporting

Risk Management Department

Internal Audit
Department

Planning/
reporting

Actualized risk

Potential risk

Eachdivision

Risks
concerning
corporate
activities

Corporate Governance

We are pursuing awareness-raising and educational activities
targeting group companies through our Takuma Group Coordinating
Committee for Compliance & CSR Promotion to ensure thoroughcompliance and risk management throughout the Group. During
FY2019, we invited representatives of group companies to participate
in two meetings of the committee.

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

Financialreportingrisks

Evaluation

Compliance & CSR Promotion Administrator (division or center manager)

Compliance & CSR Promoters (department manager)
Enlightenment/education
Staff members

Compliance & CSR promotion structure

31［Basic purpose of risk management］

Takuma Group Coordinating Committee forCompliance & CSR Promotion

Compliance & CSR Promotion Organization

Department

Risk Management Policy

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

Regular meetings

Board of Directors
President

reporting risks related to other corporate business activities.
Group companies also work to develop and strengthen
approaches to risk management through the Takuma Group
Coordinating Committee for Compliance and CSR
Promotion.

［Risk management action guidelines］●

Led by the department in charge of compliance and CSR
promotion (CSR Department), Takuma aims at encouraging
proper activities through the Compliance & CSR Promotion
Organization which was installed for the purpose of
enabling compliance and CSR to concretely permeate
company-wide through an in-house organization.
This organization is composed of a chairman (theExecutive Manager of the Compliance & CSR Promotion
Division), a secretariat (positioned in the CSR Department),
and an executing organization in each division, center, anddepartment. As the person in charge of promoting
compliance and CSR in his or her division, each division orcenter manager is appointed as a Compliance and CSR
Promotion Administrator. As persons who implementawareness and education in compliance and CSR in theirrespective departments, department managers areappointed as Compliance and CSR Promoters. The
meetings conducted within this mechanism include regularmeetings and departmental meetings.

Takuma follows a “Risk Management Policy” thatconnects company-wide risks and separately classiﬁes theminto project risks related to our core business, i.e., plant
construction; DBO project risks and DBO project operation,
maintenance and management risks related to our DBO
business; and potential risks, actualized risks, and ﬁnancial

TAKUMA 2020 ANNUAL REPORT

Evaluation
Takuma Group
Coordinating Committee forCompliance & CSR Promotion(including risk matters)Groupcompanies

Risk management structure

TAKUMA 2020 ANNUAL REPORT

32

Corporate GovernanceIR Activities

Business Continuity Plan (BCP)
Takuma has formulated a “Business Continuity Plan” based on the following policies to ensure proper and appropriate
continuity of business operations in the event of a large-scale disaster, pandemic, or other emergency:

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.
【Takuma website > IR information】
https://www.takuma.co.jp/english/investor/index.html

１．In addition to implementing disaster-related measures to secure the safety of corporate ofﬁcers and employees,
maintain structures so as to enable continuity of business operations while minimizing damage in an emergency.
２．Strive to respond to customer needs and recover from damage quickly by working closely with suppliers and partnercompanies to continue business operations.
３．Earn the trust of numerous stakeholders, including employees, their families, shareholders, and nearby residents, andfulﬁll social needs by continuing business operations.

Individuals, others:
7,540,000 shares
9.1％

Treasury stock:1,857,000 shares
2.2％

Corporations in Japan:
15,632,000 shares
18.8％【Disaster rule system diagram】
Risk Management Policy

Foreign individuals:
21,636,000 shares
26.1％

Risk Management CodeCrisis Management CodeOverseas Risk Management CodeDistribution by shareholder type

Financial institutions
and stock brokerages:
36,332,000 shares
43.8％(as of March 31, 2020)

Disaster Prevention Management CodeFire Prevention Plan

* Based on Fire Service Act
enforcement regulations

Earthquake Countermeasure Manual

Storm and Flood Damage Countermeasure Manual

BCP activation

Novel Inﬂuenza Countermeasure Manual
Safety Conﬁrmation System Administration Rules

1. Total number of authorized shares: 321,840,000
Business continuity plan (BCP)

4. Major shareholders (top 10)(as of March 31, 2020)
Shareholder

A disaster prevention exercise

A response exercise

CSR Activities

Please refer to our "CSR Report 2020" for more details on our CSR activities.
[Takuma Website > CSR]
https://www.takuma.co.jp/english/csr/index.html

CSR-related Contents:
Participation in the Community
Contribution to Society● Corporate Governance● Fair Business Practices

●

●

●

●

TAKUMA 2020 ANNUAL REPORT

Number of shares

Stake

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

8,414,000

10.4%Japan Trustee Services Bank, Ltd. (Trust Account)

6,789,000

8.4%

4,022,000

5.0%

Nippon Life Insurance Company

3,593,000

4.4%

HIKARI TSUSHIN, INC.

3,251,000

4.0%

THREADNEEDLE INVESTMENT FUNDS ICVC-JAPAN FUND

2,293,000

2.8%

JP MORGAN CHASE BANK 380055

1,868,000

2.3%

TAKUMA CO., LTD. Kyoueikai

1,816,000

2.2%

Sumitomo Mitsui Banking Corporation

1,621,000

2.0%

SSBTC CLIENT OMNIBUS ACCOUNT

1,606,000

2.0%Mizuho Trust & Banking Co., Ltd. (Retirement Beneﬁts Trust, Mizuho Bank, Ltd. Acoount)
Trust & Custody Services Bank, Ltd. (Re-entrustment)

Corporate Governance

On November 19, group and partner companies joined head ofﬁce personnel in participating indisaster prevention exercises, which included drills to test readiness for a Nankai Trough earthquake
and tsunami, ﬁreﬁghting practice, and an evacuation. The head ofﬁce is equipped to serve as atemporary shelter in the event of a tsunami or other emergency, and the exercises included practicefor providing evacuation guidance to residents. On October 9, Takumaʼs company ﬁre brigade
competed in the indoor ﬁre hydrant category of a ﬁreﬁghting technique competition organized by the
Amagasaki City Bouka Kyokai (Fire Protection Association) to maintain and improve ﬁreﬁghting skills.
The event offered the brigade an opportunity to improve its ability to respond in the event of a ﬁre. We
also held two safety conﬁrmation exercises using a system developed speciﬁcally for that purpose.
With regard to the maintenance and restoration of information systems, which is the top priority of
the Companyʼs business continuity plan (BCP), we carried out exercises envisioning an earthquakeand subsequent power outage.
These exercises and related activities served to verify that participants understand the applicable
rules and procedures and that they have the necessary knowledge and skills. We will apply the results
to future educational exercises and countermeasures as we work to improve our ability to respond in
the event of a crisis.

33

2. Total number of outstanding shares: 83,000,000
3. Total number of shareholders: 4,628 (as of March 31, 2020)

Disaster prevention exercises

CSR Activities for the Future
The Environment● Human Rights and Labor Practices● Consumer Issues

Stock Information

5. Dividend Policy
Takuma returns proﬁts to investors in line with a comprehensive assessment of business performance and other factors
based on a policy of maintaining stable dividends while working to enhance the quality of its business. Our overriding goal isto remain competitive in an increasingly challenging marketplace.
Two dividends are paid each ﬁscal year: an interim dividend offered by resolution of the Board of Directors and a year-end
dividend offered by resolution of the annual meeting of shareholders.
In keeping with this policy, the year-end dividend for the consolidated ﬁscal year under review was 18 yen per share,
which, combined with the interim dividend, brought the annual dividend to 31 yen per share.
We plan to continue to build internal reserves to strengthen our ﬁnancial foundation and to use funds to increase
corporate value through capital investment, R&D investment, and other avenues in order to lay the groundwork for the
future growth and expansion of our businesses.

TAKUMA 2020 ANNUAL REPORT

34

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

(1) Business Performance

Financial Information

Orders received during the consolidated ﬁscal year under review totaled 148,830 million yen, exceeding our target at the
beginning of the year (140,000 million yen), thanks to reliable conversion of continued robust demand centering on waste
treatment plants and biomass power plants into orders.
Sales rose 12,503 million yen from the previous year to 134,454 million yen on steady progress in the construction of orderedplants. As a result, the backlog rose 14,376 million yen to 345,315 million yen.
Operating income fell 2,003 million yen from the previous year to 9,600 million yen, while ordinary proﬁt fell 2,033 million yen
to 10,301 million yen as construction expenses incurred in addressing defects at a delivered plant offset increased sales in theDomestic Environment and Energy business. Proﬁt attributable to owners of parent fell 1,409 million yen to 7,445 million yen.
The COVID-19 pandemic did not have a substantial impact on performance during the consolidated ﬁscal year under review.
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 Business

123,154

108,123

10,619337,322(30,473)

14,399(1,785)

Overseas Environment and Energy Business

1,351

1,143

(202)

733

551

(1,913)(366)

Package Boiler Business

17,925

17,868

966

3,928

448

913

61

Equipment and Systems Business

6,790

7,840

384

3,453

(1,777)(995)

22149,221

134,975

11,767345,437(31,250)

12,403(2,068)

(390)

(521)

(2,167)

(122)

252

100

64

148,830

134,4549,600

345,315(30,998)

12,503(2,003)

Subtotal
Adjustments
Total

The Groupʼs operating segments consist of the following four businesses, of which the ﬂagship Domestic Environment andEnergy 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 under review, Domestic
Environment and Energy Plant segment accounted for 80% of total net sales before excluding inter-segment sales and 90% of total
operating income before excluding adjustments.)■ Domestic Environment and Energy Business

35

TAKUMA 2020 ANNUAL REPORTTAKUMA 2020 ANNUAL REPORT

Financial Information

During the consolidated ﬁscal year under review, efforts to take advantage of continued robust demand yielded one order for awaste treatment plant DBO project, one equipment improvement project, seven new plants (including biomass power plants andother facilities for private-sector customers), and one O&M project. Nonetheless, order volume fell 30,473 million yen to 123,154
million yen compared to the previous year, when we received orders for multiple large biomass power plants (with generating
capacity ranging from 50 to 75 MW).
At the same time, sales rose 14,399 million yen from the previous year to 108,123 million yen on steady progress in theconstruction of ordered plants. As a result, the order backlog stood at 337,322 million yen as of the end of the year, and DBO, O&M,
and other long-term projects accounted for about 40% of that ﬁgure.
Operating income fell 1,785 million yen to 10,619 million yen due to construction expenses incurred in addressing defects at anindustrial waste treatment plant we delivered to a private-sector customer.
In addition to pursuing initiatives to secure sustained growth, for example by earning new orders for biomass power plants andstrengthening the competitiveness of our sewage sludge incineration and power generation systems, we will continue to work tostrengthen and expand our revenue base by enhancing the after-sales service business, for example by strengthening the
proﬁtability of our waste incineration plant operation business, applying operational expertise horizontally to water treatment andbiomass facilities, and strengthening maintenance structures.

36

Status of Business Activities■ Overseas Environment and Energy Business■ Cash Flows from Financing Activities

Orders received during the consolidated ﬁscal year under review rose 551 million yen compared to the previous year to 1,351
million yen as we received an order for a bagasse-ﬁred plant in Myanmar following initiatives to secure orders for new plants.
At the same time, sales fell 1,913 million yen to 1,143 million yen compared to the previous year, during which we madesigniﬁcant progress in the construction of ordered bagasse-ﬁred plants, and operating income fell from 163 million yen to 202
million yen on lower sales.
In addition to pursuing initiatives to strengthen our competitiveness and create competitive advantages so that we can capturebiomass power plant orders on an ongoing basis, we will continue to work to build structures for capturing orders for Energy from
Waste plants.

Net cash used in ﬁnancing activities totaled 4,350 million yen (compared to net cash used in ﬁnancing activities of 9,120 million yen
during the previous consolidated ﬁscal year). Principal factors included cash dividends of 2,068 million yen and expenditures on purchases oftreasure stock of 2,000 million yen.

■ Package Boiler Business
Orders received during the consolidated ﬁscal year under review rose 448 million yen from the previous year to 17,925 million
yen thanks to continued initiatives to tap new demand and secure maintenance orders. Sales rose 913 million yen to 17,868
million yen, while operating income rose 61 million yen to 966 million yen.
We will continue to maintain and expand the domestic business with a focus on replacement demand and maintenance while
striving to expand the overseas business through efforts centered on our local subsidiary in Thailand.

■ Equipment and Systems Business(4) Production Output, Orders Received and Sales① Production Results
The following table summarizes the Groupʼs production results during the consolidated ﬁscal year under review by business segment:

Segment

Production output (millions of yen)

Year-on-year (%)

Domestic Environment and Energy Business

79,204

25.7

Overseas Environment and Energy Business

932(53.5)

Orders received during the consolidated ﬁscal year under review fell 1,777 million yen to 6,790 million yen compared to theprevious year, when the segment booked an order for a large project, despite continued efforts to tap strong demand centering on
equipment construction. Sales fell 995 million yen to 7,840 million yen.
At the same time, operating income rose 22 million yen to 384 million yen as improved proﬁt margins offset lower sales.
Going forward, we will continue to work to secure stable proﬁts by working steadily to capture robust demand.

Package Boiler Business

11,927

6.8

Equipment and Systems Business

6,291(15.1)The Group is currently implementing its 12th Medium-Term Management Plan, which covers FY2018 to FY2020 and which has
set forth a cumulative (three-year) consolidated ordinary proﬁt target of 330 million yen. We have made smooth progress toward
this goal, as is evidenced by the achievement of cumulative ordinary proﬁt totaling 22.6 billion yen and an order backlog of 345.3
billion yen as of the end of the consolidated ﬁscal year under review.
The COVID-19 pandemic has not yet had a substantial impact on the Groupʼs performance, and we will continue to do ourutmost to achieve the targets set forth in the Medium-Term Management Plan.
That said, potential effects in the event of a worsening of the pandemic include fewer new orders as demand slows and neworders are delayed, as well as lower sales as delivery of existing orders is delayed.

Total(2) Financial Position
Total assets as of the end of the consolidated ﬁscal year under review rose 7,509 million yen from the end of the previous
consolidated ﬁscal year to 163,498 million yen. Principal factors included an increase in notes and accounts receivable trade of
23,988 million yen, which offset a decrease in cash and time deposits of 15,624 million yen.
Liabilities rose 5,557 million yen from the end of the previous consolidated ﬁscal year to 78,458 million yen. Principal factors
included an increase in notes and accounts payable trade of 6,122 million yen.
Net assets rose 1,952 million yen from the end of the previous consolidated ﬁscal year to 85,040 million yen. Principal factors
included a decrease in treasury stock of 1,943 million yen due to acquisitions of treasury stock and other factors, which was offset
by an increase in retained earnings of 5,378 million yen due to factors including posting of proﬁt attributable to owners of parent
for the consolidated ﬁscal year under review.
As a result, the capital adequacy ratio at the end of the consolidated ﬁscal year under review fell 1.2 points from the end of theprevious year to 51.8%, while net assets per share rose 42.81 yen from the end of the previous year to 1,043.15 yen.
The COVID-19 pandemic did not have a substantial impact on the Companyʼs ﬁnancial position during the consolidated ﬁscal
year under review.

(3) Status of Cash Flow

Subtotal

98,355

17.7

Inter-segment transactions(433)(26.8)

97,92218,0Note:
1. Amounts are expressed as total manufacturing expenses.
2. Amounts do not include consumption tax or other taxes.

② Orders Received
The following table summarizes orders received by the Group during the consolidated ﬁscal year under review by business segment:

Segment

Orders received(millions of yen)

Year-on-year(%)

Backlog(millions of yen)Domestic Environment and Energy Business

123,154(19.8)

337,322

4.7

Overseas Environment and Energy Business

1,351

69.0

733

39.6

Package Boiler Business

17,925

2.6

3,928

1.5

Equipment and Systems BusinessYear-on-year
(%)

6,790

(20.7)

3,453(23.3)

Subtotal

149,221(17.3)

345,437

4.3

Inter-segment transactions(390)(39.2)(122)(51.7)

148,830(17.2)

345,315

4.3

Total

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 thebacklog ﬁgures in the above table include that portion of speculative production for which delivery to a speciﬁc customer has been ﬁnalized.

③ Sales
The following table summarizes the Groupʼs sales results during the consolidated ﬁscal year under review by business segment:

Segment

Sales amount(millions of yen)

■ Cash Flows from Operating Activities

Domestic Environment and Energy Business

108,123

15.4

Net cash used in operating activities totaled 11,733 million yen (compared to net cash provided by operating activities of 10,817
million yen during the previous consolidated ﬁscal year). Principal factors included income before income taxes of 10,139 million
yen, which was offset by a decrease in accounts receivable and advances received of 23,614 million yen.

Overseas Environment and Energy Business

1,143(62.6)

Package Boiler Business

17,8685.4

Net cash used in investing activities totaled 202 million yen (compared to net cash used in investing activities of 1,382 million
yen during the previous consolidated ﬁscal year). Principal factors included income from the sale of investment securities of 2,621
million yen, which was offset by expenditures on purchases of property, plant and equipment of 1,520 million yen and
expenditures on purchases of investment securities of 1,253 million yen.

TAKUMA 2020 ANNUAL REPORT

Equipment and Systems Business
SubtotalInter-segment transactions
Total

Financial Information

Cash and cash equivalents at the end of the consolidated ﬁscal year under review fell 16,274 million yen from the end of theprevious consolidated ﬁscal year to 44,753 million yen.

■ Cash Flows from Investing Activities

37

The Takuma Group obtains working capital as well as funds for use in capital investment and research and development to expand its
businesses in the future from group funds, advances from customers, and lending from ﬁnancial 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 agreementswith multiple ﬁnancial institutions to complement liquidity in preparation for unexpected contingencies such as the COVID-19 pandemic.

Year-on-year (%)

7,840(11.3)

134,975

10.1

(521)

(16.2)

134,454

10.3

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

TAKUMA 2020 ANNUAL REPORT

38

Status of Business Activities(5) Important accounting estimates and underlying assumptions
The Groupʼs 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 signiﬁcant accounting 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 Groupʼs
consolidated ﬁnancial statements.
More information about the Groupʼs approach to the impact of the COVID-19 pandemic as it applies to accounting estimates canbe found in “4. Additional information” under “Notes to Consolidated Financial Statements.”① Deferred tax assets
In determining deferred tax assets, the Group uses reasonable estimates of future taxable income and considers thelikelihood of collection in order to post the amount that it anticipates being able to recover. However, in the event of a change
in the recoverable portion of deferred tax assets, for example due to changes in the business environment following a decline indemand, performance could be adversely affected by the need to draw down deferred tax assets.

② Allowance for losses on sales contracts
In order to account for the possibility of losses on contracted work, the Group posts an allowance for losses on sales contracts
it expects to sustain during or after the next consolidated ﬁscal year in the event it determines that estimated construction costs
for contracts included in the order backlog at the end of the current consolidated ﬁscal year will signiﬁcantly exceed the value of
underlying orders. However, in the event that costs exceed these estimates, for example due to a signiﬁcant increase in material,
equipment, or construction prices, performance could be adversely affected by the need to post additional allowance for losses
on sales contracts.

2. Contracts of Major Importance in the Groupʼs BusinessContract target

Contract date

Name of other party

Contract term
Until December 2038
For 10 years, then automaticallyrenewed every year

Takuma Co., Ltd.

Continuous bed ﬁltration of liquids

April 1979

Nordic Water Products AB(Sweden)Takuma Co., Ltd.

Process for the organic and anaerobic
treatment of waste

December 2011

Hitachi Zosen Inova AG(Switzerland)

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

(2) Technology Out-licensing Contracts
Contract target

Contract date

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 ﬂue gas
treatment systems using impulse waves

November 2005

Nihon Spindle Manufacturing Co., Ltd.
(Japan)For 10 years, then automaticallyrenewed every year

TAKUMA 2020 ANNUAL REPORT(1) Environment and Energy Business① In the area of waste treatment, we continue to utilize a multipurpose demonstration incinerator with a stoker at one of ourplants to develop such aspects of equipment operation as the reduction of harmful substances (e.g., nitrogen oxides, acidic
gases, dioxins, and mercury) 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, we
continue to pursue a project known as “Development of a Next-generation Low-carbon High-efﬁciency Biogas Power System
and Combined System Using CO2 Separation Membranes,” which was adopted as an Evaluation and Demonstration Project for
Advanced Waste Treatment Systems at Small and Medium-size Waste Treatment Facilities by the Ministry of the Environment.
We are working to stabilize combustion and to develop technologies for remote monitoring using AI and the IoT, for example byutilizing, a comprehensive support system for operation, maintenance, and management that enables integrated useof a range of data that facilities previously managed and evaluated independently. Weʼre working to enhance the functionality
and services offered byat the newly established 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.

Name of other party

Contract term

③ In the area of water treatment, we continue 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. With our sewage sludge
incineration and power generation system, weʼve worked to develop technologies for reducing nitrogen oxides in exhaust gases.
We also continue to develop technologies for expanding the range of wastewater with which the anammox process can be used.
The research and development budget for this segment of our business was 999 million yen.

(2) Package Boiler BusinessWe developed and launched the EQiH-3000NM/LM gas-ﬁred steam boilers, both high-pressure models in the SUPER EQOS lineof high-efﬁciency, multifunctional boilers. With models offering a maximum operating pressure of 1.57 MPa or 1.96 MPa, the line
provides coverage for a broad range of applications requiring high-pressure steam. In addition to super-high-efﬁciency operationthat rivals the industryʼs best designs, gas burners that can control output in multiple stages to reduce minimum output help thesemodels deliver signiﬁcantly improved energy savings.
We also developed and introduced the EQOS EQSH-502KM/AM/NM/LM gas- and oil-ﬁred steam boilers. Designed as new,high-efﬁciency replacements for the previous EQOS EQS-502, the products incorporate an economizer to deliver even higher
efﬁciency.
The research and development budget for this segment of our business was 60 million yen.

(3) Equipment and Systems BusinessIn washing systems for semiconductor plants, we continued to participate in a joint research project with a university to develop
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 universityʼs facilities to conductdetailed analysis and evaluation. We also launched a joint research project with a university to develop ozone nano-bubble watersterilization technology in an effort to bring micro-bubble generation technology to applications in ﬁelds other than thesemiconductor and electronics industries.
In the area of chemical ﬁlters for clean rooms at semiconductor plants, we are developing ﬁlters that will deliver advanced
functionality and longer service life.
Going forward, we will continue to improve our washing systems and chemical ﬁlters as we work to develop products that meetcustomer needs.
The research and development budget for this segment of our business was 94 million yen.

TAKUMA 2020 ANNUAL REPORT

Financial Information

Contractee

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

39

Having identiﬁed the ﬁelds of environmental protection and renewable energy utilization as its principal business domains in aneffort to achieve a sustainable, low- or no-carbon society that is not excessively dependent on nuclear power or fossil fuels, the Takuma
Group is focusing its management resources on business in these domains as it pursues research and development in keeping with thecorporate vision it has set forth of being an indispensable presence in society as a leading company.
The Takuma Group has consolidated its technology-related departments into the Engineering Group, through which it is actively
working to strengthen and pass on its technological capabilities and develop new technologies, products, and services throughcollaboration between the Takuma Group companies and joint research with outside research institutions, universities, andprivate-sector companies.
Expenditures on research and development during the consolidated ﬁscal year under review totaled 1,154 million yen. Principal
research and development activities by business segment were as follows: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 with Japanʼs feed-in
tariff program for power generated from renewable sources.

(1) Technology In-licensing Contracts
Contractee

3. Research and Development Activities

40

Financial Statement
Consolidated Balance Sheets
TAKUMA CO., LTD. and Consolidated Subsidiaries
As of March 31, 2020 and 2019
Thousands of
U.S. dollars(Note 1)Millions of yen
ASSETS

2020¥

46,145¥61,769$424,01573,03449,046

671,083

556

764

5,104

Unconsolidated subsidiaries

Other

785

281

7,216

and afﬁliated companies

Less allowance for doubtful accounts

(20)

(28)

(183)

Other

Total

74,35550,063

683,220

Total

Inventories (Note 6)

4,681

4,356

43,014

Other

1,787

1,732

16,414

126,968

117,920

1,166,663

Total current assets
Property, plant and equipment:

2,497

3,013

22,945

Buildings and structures (Note 9)

11,955

11,905

109,856

Machinery, equipment, lease assets and construction in progress

10,114

8,969

92,932(Note 9)24,56623,887

225,733(16,146)(15,593)(148,360)

8,420

8,294

77,373

Total property, plant and equipment

Investment securities (Notes 7, 8 and 9)

15,138

126,945

Investments in:

43,70837,587

401,622

301

334

2,761

Accrued income taxes

1,673

3,628

15,374

Advances received

10,0299,798

92,155

165

149

1,516

3,401

1,739

31,251

Allowance for guarantees on completed work

833

999

7,656

5,429

6,023

49,881

67,582

62,246620,991

Long-term debt (Notes 7 and 10)

262

342

2,409

Allowance for directorsʼ and executive ofﬁcersʼ retirement beneﬁts

220

185

2,022

10,111

9,746

92,906

Other
Total current liabilities
Long-term liabilities:

283

382

2,598

Total long-term liabilities

10,876

10,65599,935

Total liabilities

78,45872,901

720,926

2,112

4,163

19,403
13,367

13,367

122,829

5,433

5,460

49,923

Net assets (Note 13):

(109)

(109)

(998)

Common stock

7,436

9,514

68,328

6,529

4,810

59,993Net deﬁned beneﬁt asset

54

-

494

Other

276

313

2,533

28,11029,775258,293

Total investments and other assets

735

13,721Less allowance for doubtful accounts
Deferred tax assets (Note 16)4,319

418,104

Other
Total

$

Contingent liabilities (Note 12)

Unconsolidated subsidiaries
and afﬁliated companies

645
117

1,227

Other
13,815¥80

39,148Net deﬁned beneﬁt liability (Note 11)
Investments and other assets:

470

1,493

Provision for loss on liquidation of subsidiaries and associates

Land (Note 9)¥45,502

Allowance for losses on sales contracts

Less accumulated depreciation

2020

2019

Notes and accounts payable (Note 7):
Trade

Unconsolidated subsidiaries
and afﬁliated companies

Short-term loans payable (Notes 7 and 10)
Current portion of long-term debt (Notes 7 and 10)

Notes and accounts receivable (Note 7):
Trade

2020

Current liabilities:

Current assets:
Cash and time deposits (Notes 5, 7 and 9)

Millions of yen
LIABILITIES AND NET ASSETS

2020

2019

Thousands of
U.S. dollars(Note 1)

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

3,818

3,768

35,084Retained earnings

66,24460,866608,688

Treasury stock, at cost

(2,178)(235)(20,017)

Total shareholders' equity

81,251

77,766

746,584

Unrealized gains on securities

3,764

5,390

34,5904835Foreign currency translation adjustments

(3)

(4)

(24)

Remeasurements of deﬁned beneﬁt plans

1,857,894 shares in 2020 and
331,644 shares in 2019
¥ 163,498¥ 155,989$ 1,502,329

Deferred gains and losses on hedges

(373)

(463)

(3,431)

Total accumulated other comprehensive income

3,392

4,931

31,170Non-controlling interests in consolidated subsidiaries

397

391

3,649

85,04083,088781,403¥ 163,498¥ 155,989$ 1,502,329

Total net assets
Total liabilities and net assets

Financial Information

Total assets

See accompanying notes.

41

TAKUMA 2020 ANNUAL REPORTTAKUMA 2020 ANNUAL REPORT

42

Financial Statement
Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income

TAKUMA CO., LTD. and Consolidated Subsidiaries
For the years ended March 31, 2020 and 2019

TAKUMA CO., LTD. and Consolidated Subsidiaries
For the years ended March 31, 2020 and 2019
Thousands of
U.S. dollars(Note 1)Millions of yen
2020
Net sales (Note 18)¥

Cost of sales (Notes 11, 14, 15 and 18)
Gross proﬁt
Selling, general and administrative expenses (Notes 11, 15 and 18)
Operating income (Note 18)

2020

121,951$ 1,235,453

108,592

94,491

997,817

25,862

27,460237,636

Unrealized losses on securities

¥

(9)

42

Remeasurements of deﬁned beneﬁt plans

89

96

822

710

-

6,521

(565)

-

(5,196)

-

(999)

-

Loss on sales of investment securities

(214)

-

(1,965)

Loss on valuation of investment securities

(92)

(155)

(842)

Commitment fee

(29)

(17)

(263)

Loss on disposal of property, plant and equipment

(53)

(58)

(490)

-

(49)

-

Equity in earnings of afﬁliated companies

222

473

2,044

Other, net

92

(19)

840

539

(464)

4,953

10,139Total other comprehensive income

Current

3,891

4,179

35,756

Deferred(1,169)(1,991)(10,740)

2,722

2,188

25,016
68,152

8,952

Proﬁt (loss) attributable to non-controlling interests
(28)
7,445

(261)

98
¥

8,854

$

68,413

U.S. dollars(Note 1)Yen
Per share:

Cash dividends applicable to the year

¥

90.36

¥

107.10

$

0.83

5,881

¥

7,325

$

54,041

Owners of the parent

¥

5,907

¥

7,227

$

54,275

Non-controlling interests

(26)

(234)

98

Consolidated Statements of Changes in Net Assets
TAKUMA CO., LTD. and Consolidated Subsidiaries
For the years ended March 31, 2020 and 2019

Treasurystock,
at costTotal
shareholders'equityForeigncurrency
Unrealized
Deferredtranslation
gains on gains and losses
adjustsecurities
on hedges
ments

(235)

¥ 77,766¥

391¥ 83,088(2,068)-(2,068)

-

-

-

-

-

-

(2,068)

-

7,446

-

7,446

-

-

-

-

-

-

7,446

-

-

-

(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)

Balance at the end of current period¥ 13,367¥ 3,818¥ 66,244¥ (2,178)¥ 81,251¥¥ 13,367¥ 3,768¥ 52,949¥(235)¥ 69,849¥

Cash dividends (¥19.00 per share)--(1,571)-(1,571)

-

-

-

-

-

Proﬁt attributable to owners of parent

-

-

8,854

-

8,854

-

-

-

-

Change in scope of consolidation

-

-

657

-

657

-

-

-

Change in scope of equity method

-

-

(23)

-

(23)

-

-

-

Commonstock

CapitalsurplusRetainedearnings¥ 13,367¥ 3,768¥ 60,866

Cash dividends (¥25.00 per share)--

Proﬁt attributable to owners of parent-

Purchase of treasury stock

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

Total
net assets¥

Millions of yen¥

For the years ended March 31, 2019
Balance at the beginning of current period

Total
NonRemeasure- accumulated controllingments ofotherinterests indeﬁnedcomprehensive consolidated
beneﬁt plansincomesubsidiaries

5,390

3,764

¥

8

¥

¥

(4)

(463)

¥

4,931

¥

4

¥

(3)

¥

(373)

¥

3,392

¥

397

¥ 85,040

(46)

¥

2

¥

(559)

¥

6,558

¥

319

¥ 76,726-(1,571)

-

-

8,854

-

-

-

657

-

-

-

(23)

Millions of yen
7,161

¥

Purchase of treasury stock

-

-

(0)

(0)

-

-

-

-

-

-

(0)

-

-

-

-

Other changes during the year, net

-

-

-

-

-

(1,771)

54

(6)

96

(1,627)72(1,555)

31.00

22.00

0.28

Balance at the end of current period¥ 13,367¥ 3,768¥ 60,866(235)¥ 77,766

391¥ 83,088$ 122,829$ 34,625 $ 559,274 $ (2,165) $ 714,563¥

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

¥

5,390

¥

8

¥

(4)

¥

(463)

¥

4,931

¥

$

Financial Information

Diluted net income(14,111)(1,627)¥

Comprehensive income attributed to:

93,168

11,1407,417(1,536)Comprehensive income（Note 17)

Income taxes (Note 16):

Net income

(41)

58

5

Gain on sales of investment securities (Note 8)¥(14,934)

(5)

4,459

Proﬁt attributable to owners of parent(1,772)Foreign currency translation adjustments(155)

in consolidated subsidiaries(1,625)88,215419

Proﬁt68,152Other comprehensive income：

149,421(59)

Total income taxes

$

8,952

11,604

485

Income before income taxes¥

15,856(17)

Other income (expenses), net

2020

2019

7,417

9,600

Interest expense

Provision for doubtful accounts¥

16,262

Interest and dividend income

Provision for loss on liquidation of subsidiaries and associates

Proﬁt

Deferred gains and losses on hedges

Other income (expenses):

Settlement package

Millions of yen
2020

2019

134,454

Thousands of
U.S. dollars(Note 1)Thousands of U.S. dollars (Note 1)$ 49,522

$

76

(38)

$ (4,252)$ 45,308

Cash dividends ($0.23 per share)--(19,000)-(19,000)

-

-

-

-

-

-

Proﬁt attributable to owners of parent--

68,414-

68,414

-

-

-

-

-

-

68,414Purchase of treasury stock

-

-

-

(18,377)(18,377)

-

-

-

-

-

-

(18,377)

Disposal of treasury shares

-

459

-

525

984

-

-

-

-

-

-

984

Other changes during the year, net

-

-

-

-

-

(14,932)

(41)

14

821

(14,138)59(14,079)

Balance at the end of current period$ 122,829$ 35,084 $ 608,688 $ (20,017) $ 746,584$ 34,590(24)$ (3,431)$ 31,170

$

35

$

$

$

3,590 $ 763,461(19,000)

3,649 $ 781,403

See accompanying notes.

43

TAKUMA 2020 ANNUAL REPORTTAKUMA 2020 ANNUAL REPORT

44

Financial Statement
Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

TAKUMA CO., LTD. and Consolidated Subsidiaries
For the years ended March 31, 2020 and 2019

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

Millions of yen
2020
2019
Cash ﬂows from operating activities:
Income before income taxes¥

10,139¥

11,140$93,168Adjustments to reconcile income before income taxes
to net cash provided by operating activities:
Depreciation

917

798

-

40

-

(496)

7

(4,557)

Loss (gain) on valuation of investment securities

92

155

842

Increase (decrease) in allowance for bonuses

183

4

1,683

Increase (decrease) in allowance for losses on sales contracts

1,662

1,367

15,267

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

(166)

999

(1,523)

494

470

4,539

(485)

(419)

(4,458)

Impairment loss
Loss (gain) on sales of investment securities

Increase (decrease) in net deﬁned beneﬁt liability
Interest and dividend income
Interest expense
Equity in losses (earnings) of afﬁliated companies
Net decrease (increase) in notes and accounts receivable and advances received

8,426

17

59

155

(222)

(473)

(2,044)(23,614)(2,229)(216,984)

Decrease (increase) in inventories

(312)

3

(2,864)

Decrease (increase) in other current assets

(529)

(27)

(4,858)Net increase (decrease) in notes and accounts payable and advance money

6,146

1,865

56,474

Increase (decrease) in other current liabilities

(551)

431

(5,059)211(3,197)

1,935(6,514)

10,993(59,858)

Other
SubtotalInterest and dividend received

563

647

5,175

Interest paid

(19)

(60)

(170)

Income taxes received (paid)
Net cash provided by operating activities(5,763)(763)(52,953)(11,733)

10,817(107,806)

Cash ﬂows from investing activities:
Net decrease (increase) in time deposits

(650)

(14)

(5,973)Purchase of property, plant and equipment(1,520)(482)(13,967)

Sale of property, plant and equipment

508

2

4,666

Purchase of intangible ﬁxed assets

(36)

(51)

(334)

Purchase of investment securities(802)(11,513)

2,621

105

24,087

Disbursement for loans receivable

(50)

-

(459)

Collection of loans receivable

140

112

1,284

Other

38

(252)

351

(202)

(1,382)(1,858)(175)(7,030)(1,608)

(117)

(470)

(1,072)

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

(2,000)(0)(18,377)

Purchase of treasury stock(2,068)(1,571)(19,000)

Payment of cash dividends

(24)

(28)

(219)

34

(21)

305

(4,350)(9,120)(39,971)

Dividends paid to non-controlling interests
Other
Net cash used in ﬁnancing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase (decrease) in cash and cash equivalents resulting from change in scope of consolidation
Cash and cash equivalents at end of year (Note 5)
See accompanying notes.

45

TAKUMA 2020 ANNUAL REPORT

¥

11

(11)

102

(16,274)304(149,533)

61,02760,283560,757-440-

61,027$ 411,224

44,753¥

The accompanying consolidated ﬁnancial statements have been prepared in accordance with the provisions set forth in the Japanese
Financial Instruments and Exchange Law and its related accounting regulations and in conformity with accounting principles generally
accepted in Japan, which are different in certain respects as to application and disclosure requirements from International Financial
Reporting Standards.
The accounts of overseas subsidiaries are based on their accounting records maintained in conformity with generally accepted
accounting principles prevailing in the respective countries of domicile. However, necessary adjustments are made upon consolidation.
The accompanying consolidated ﬁnancial statements have been restructured and translated into English from the consolidated
ﬁnancial statements of TAKUMA CO., LTD. (the “Company”) prepared in accordance with Japanese GAAP and ﬁled with the appropriate
Local Finance Bureau of the Ministry of Finance as required by the Japanese Financial Instruments and Exchange Law. Some
supplementary information included in the statutory Japanese language consolidated ﬁnancial statements, but not required for fairpresentation, 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 of readers outside Japan,
using the prevailing exchange rate at March 31, 2020, which was ¥108.83 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 thisor 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 27 signiﬁcant subsidiaries (the “Companies”).
Saitama High Trust Co., Ltd., Komaoka High Trust Co., Ltd., which were newly established subsidiaries, have been included in the
consolidation from the consolidated ﬁscal year ended March 31, 2020. All signiﬁcant intercompany transactions and unrealized
proﬁts among the Companies have been eliminated in consolidation. Investments in certain signiﬁcant afﬁliates over which theCompany and/or its subsidiaries are able to exert inﬂuence to a material degree with regard to ﬁnancial and operating decision
making, other than consolidated subsidiaries, are accounted for by the equity method after the elimination of unrealizedintercompany 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 denominatedin foreign 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
and low risk of price ﬂuctuation.
(4) Securities
Equity securities issued by subsidiaries and afﬁliated companies which are not consolidated or accounted for using the equity
method are stated at cost determined by moving average cost. Available-for-sale securities with available fair market value arestated at fair market value, and unrealized gains and losses on these securities are reported net of applicable income taxes as aseparate 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.

Financial Information(1,253)

Sale of investment securities

1. Basis of presenting ﬁnancial statements

If the market value of equity securities issued by unconsolidated subsidiaries and afﬁliated companies or available-for-salesecurities declines signiﬁcantly, such securities are stated at fair market value and the difference between fair market value and thecarrying amount is recognized as loss in the period of the decline. If the fair market value of such securities is not readily available,
such securities should be written down to net asset value with a corresponding charge in the income statement in the event the net
asset value declines signiﬁcantly. In these cases, the fair market value or the net asset value will be the carrying amount of the
securities at the beginning of the next year.
(5) Allowance for doubtful accounts
The Companies provide an allowance for doubtful accounts by estimating the uncollectible amounts of certain individual accounts
and by applying a percentage based on collection experience to the remaining receivables.

TAKUMA 2020 ANNUAL REPORT

46

Financial Statement

3. Accounting standards issued but not yet adopted●●

Consolidated Statements of Cash Flows(6) Inventories
Merchandise and ﬁnished goods are stated at cost using the moving average method. Work-in-process is stated at cost determined by theidentiﬁed 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 the asset.
However, buildings acquired after March 31, 1998 and facilities attached to buildings and structures acquired after March 31, 2016 aredepreciated using the straight-line method. The range of useful lives is principally from 3 to 60 years for buildings and structures and from
2 to 20 years for machinery, equipment and other. Maintenance and repairs, including minor renewals and improvements, are charged toincome as incurred.
Lease assets under ﬁnance leases in which the ownership of the lease assets is not transferred to the lessee are depreciated using thestraight-line method over the lease term with an assumption of no residual value.
(8) Allowance for losses on sales contracts
For sales orders on hand at the balance sheet date for projects in which the estimated cost is expected to exceed the price of the order by awide 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.

(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 date
Effective from the beginning of the ﬁscal year ending March 31, 2022.
(3) Effects of application of the standard and guidance
The Company and its consolidated domestic subsidiaries are currently in the process of determining the effects of the standard andguidance on the consolidated ﬁnancial statements.

4. Additional information
As Covid-19 has had no signiﬁcant effect on the ﬁnancial statements for the year ended March 31, 2020, it is assumed that there is no
signiﬁcant effect on the accounting estimates such as retrievability of deferred tax assets. If the virus were to have more inﬂuence onsociety and economy than ever, the consolidated ﬁnancial statements for the next ﬁscal year would reﬂect the inﬂuence.

5. Cash and cash equivalents(11) Allowance for directorsʼ retirement beneﬁts
Directors are generally entitled to receive retirement beneﬁts based on the Companiesʼ internal rules. The Companies provide anallowance for directorsʼ retirement beneﬁts based on the amount that would be required if all directors retired at the balance sheet date.

Amounts of cash and cash equivalents as of March 31, 2020 and 2019 were reconciled with cash and time deposits as follows:(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.

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

6. Inventories(14) Income taxes
The Companies are subject to corporation tax, inhabitants tax and enterprise tax based on taxable income. The Companies recognize thetax 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 the Consolidated
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 and liabilities that relate totransitioning to the group taxation system and related amendments of tax laws for transitioning to the single tax payment system.

(16) Derivatives and hedge accounting
The Companies generally state derivative ﬁnancial instruments at fair value and recognize changes in the fair value as gains or losses
unless the derivative ﬁnancial instruments are used for hedging purposes. If derivative ﬁnancial instruments are used as hedges and meetcertain hedging criteria, the Companies generally defer recognition of gain or loss resulting from a change in the fair value of thederivative ﬁnancial instrument until the related loss or gain on the hedged item is recognized.
The Companies use currency forward contracts to hedge accounts receivable and payable denominated in foreign currencies (mainly U.S.
dollars) against the risk of ﬂuctuation in exchange rates that comes from foreign currency transactions.
Certain foreign exchange contracts are subject to appropriation if they satisfy the requirements of appropriation treatment. Interest rate
swaps that qualify for hedge accounting and meet speciﬁc matching criteria are not re-measured at market value.
(17) Reclassiﬁcations
Certain prior year amounts have been reclassiﬁed to conform to the 2020 presentation.

TAKUMA 2020 ANNUAL REPORT¥¥

Millions of yen
2020
2019
46,145¥61,769(1,392)44,753¥(742)
61,027

Thousands of U.S. dollars
2020$
424,015$(12,791)
411,224

Inventories were summarized as follows:

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

Millions of yen
2020
2019
1,003
¥
816
2,048
2,087
1,630
1,453
4,681
¥
4,356

Thousands of U.S. dollars
2020
$
9,215
18,824
14,975$43,014

7．Financial instruments(1) Status of ﬁnancial instruments(a) Financial instruments policy
Under Group policy, investments in ﬁnancial instruments are limited primarily to short-term deposits and bank loans for raisingfunds. 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 consists 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.

Financial Information(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 each period.
Diluted net income per share is computed with the assumption that all convertible bonds were converted into common stock at the
beginning of each period. Cash dividends per share represent interim dividends declared by the Board of Directors during each year andyear-end dividends approved by the shareholders at the annual meeting held subsequent to the end of the ﬁscal year.

47“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)

With ﬂoating rate loans, which are exposed to interest rate ﬂuctuation risk, Group companies use derivative transactions(interest rate swaps) as a part of their long-term loans to hedge the risk of interest rate ﬂuctuation on bank loans and to ﬁx
interest payments.
To cope with operating receivables and loans exposed to liquidity risk, each Group company prepares monthly cash-ﬂow plans
and enters into loan commitment agreements with several ﬁnancial institutions for raising working capital ﬂexibly and stably.
(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.

TAKUMA 2020 ANNUAL REPORT

48

Financial Statement(2) Fair value of ﬁnancial instruments
Amounts recognized on the consolidated balance sheets, fair values and any differences between them as of March 31, 2020 and
2019, 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 short period of time
and the fair value is nearly equal to the book value.
Millions of yen
Thousands of U.S. dollars
2020
Amounts recognized on the consolidated balance sheets¥

Fair value
Difference

2019

46,145¥

46,145-¥

2020

61,769$61,769-¥(Short-term loans payable)
The fair value of short-term loans payable is based on the relevant book value because they are settled within a short period of time andthe fair value is nearly equal to the book value.
Millions of yen
Thousands of U.S. dollars
2020
Amounts recognized on the consolidated balance sheets
Fair value
Difference

2019

2020
Amounts recognized on the consolidated balance sheets¥

Fair value
Difference

73,349¥73,349-¥2020

49,507$49,507-¥

673,978
673,978-$（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
2019

2020
Amounts recognized on the consolidated balance sheets¥

Fair value
Difference

13,579¥13,579-¥14,943$

14,943-¥

Amounts recognized on the consolidated balance sheets

342¥

Difference

Fair value
Difference

29,276¥29,276-¥37,86937,869-¥Fair value
Difference

14,681¥Equity securities issued by afﬁliates¥

14,681-¥

15,942-¥Thousands of U.S. dollars

¥

2020

3,811

236

$

16,6661952,169(3) Redemption schedule of monetary assets with contractual maturities and repayment schedule of short-term loans payable andlong-term debt
Millions of yen¥

124,775

Notes and accounts receivable

46,145

1 to 2 years¥

53,573-2 to 3 years¥

19,639-3 to 4 years
-

¥

137

4 to 5 years¥--

More than 5 years
¥

-

-

-

-

Total

¥

99,718¥

Short-term loans payable

¥

470

¥

80

Long-term debt

550

Total

¥

As of March 31, 2019

Less than 1 year

Cash and time deposits¥-

19,639

¥

-

¥

182
¥

182

-

134,895
134,895
-

$

-

¥

-

137

¥

-

¥

-

¥

-

¥

80

269,008

$

$

12

$

2019

1,814

Other

Cash and time deposits

2020

15,942

3,156

3

¥

2020

124,775

269,008

2019

2020
¥

462

Millions of yen
Amounts recognized on the consolidated balance sheets

Less than 1 year

(Electronically recorded obligations)
The fair value of electronically recorded obligations is based on the relevant book value because they are mostly 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
Amounts recognized on the consolidated balance sheets

3,144

$

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

As of March 31, 2020

$

$

2020
459

¥

1

¥

2020

(Notes and accounts payable)
The fair value of notes and accounts payable is based on the relevant book value because they are mostly settled within a short periodof time and the fair value is nearly equal to the book value.
Millions of yen
Thousands of U.S. dollars
2020
2019
2020
¥

2019
343

Investment securities

Amounts recognized on the consolidated balance sheets-$

Thousands of U.S. dollars

Millions of yen
2020
Fair value(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 shortperiod of time and the fair value is nearly equal to the book value.
Thousands of U.S. dollars
Millions of yen

4,319

-

¥

(Long-term debt)
The fair value of long-term debt is calculated by a method that discounts total principal plus interest by an assumed interest rate for asimilar new loan. Short-term ﬁnancing is primarily for operating funds, while long-term debt is for capital investment.

424,015
-

4,319

$

645

-

¥

2020
645

¥

470

424,015

$

2019
470

¥

80

-

¥

800

-

¥

800

-

¥

-

¥

-

¥

-

Millions of yen
61,7691 to 2 years¥

40,827

Notes and accounts receivable¥

102,596¥

Short-term loans payable

¥

645

¥

117
762

Total

¥

As of March 31, 2020

Less than 1 year

Cash and time deposits

$

¥

-

¥

80

3 to 4 years
-

¥

¥

-

¥

182

¥

-

¥

80

More than 5 years
¥

-

-

¥

-

-

¥

-

¥

-

-

-

80
¥

-

-

10

182
¥

4 to 5 years
¥

-

-

8,670

80
¥

10

-

Total

Long-term debt

¥

8,670

-

Investment securities-

2 to 3 years

-

¥

-

2019

2020
Amounts recognized on the consolidated balance sheets¥

Fair value
Difference

1,673

¥

1,673
¥

-

2020

3,628

$

3,628
¥

-

15,374
15,374$-$916,279$

Short-term loans payable

$

4,319

$

735
5,054

$

$

-

$

1,674

3 to 4 years$

4 to 5 years
$

-

$

-

$

-

$

$

-

More than 5 years
$

7,351

-

$

7,351

-

$

-

$

-

-

$

735

-

1,257

735
$

-

-

180,457

1,674
$

1,257

-

Total

$

-

2 to 3 years

180,457-

Investment securities

Total

TAKUMA 2020 ANNUAL REPORT$

492,264

Notes and accounts receivable

Long-term debt

49

424,015

1 to 2 years-

Financial Information

Thousands of U.S. dollars(Accrued income taxes)
The fair value of accrued income taxes is based on the relevant book value because they are settled within a short period of time andthe fair value is nearly equal to the book value.
Thousands of U.S. dollars
Millions of yen$-

TAKUMA 2020 ANNUAL REPORT

50

Financial Statement

10. Short-term loans payable and long-term debt
Short-term loans payable as of March 31, 2020 and 2019 were as follows:

Acquisition cost

Book value¥

Subtotal

5,030

¥

5,030

10,888¥

10,888

5,858

2,294

Debt securities
Subtotal
Total

¥

1,899

(395)

828

792

(36)

3,122

2,691

(431)

8,152

¥

¥

13,579¥5,427

Acquisition cost¥¥

Subtotal

6,417

Difference

14,319¥7,902

14,3197,902

Equity securities

759

624

(135)

Subtotal

759

624

(135)

Securities with book values not exceeding acquisition costs：

¥

7,176

¥

14,943¥

7,767

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

Acquisition cost

Book value

Difference

Securities with book values exceeding acquisition costs：
Equity securities$

Subtotal

46,219$100,041$

53,822

46,219100,041

53,822Equity securities

21,08017,449(3,631)

Debt securities

7,611

7,285

(326)

Subtotal

28,691

24,734(3,957)

Securities with book values not exceeding acquisition costs：

Total

$

74,910$124,775$

49,8652019

2020

Secured¥Total sales amount

¥

904

Gains

¥

-

710

$

-

8,307
6,521

9. Pledged assets
The following assets were pledged to secure short-term loans payable, long-term debt, and ｃontingent liabilities under guarantees forbank loans of afﬁliated companies and fulﬁllment of contracts as of March 31, 2020 and 2019:
Thousands of U.S. dollars

Millions of yen
Buildings and structures¥

Machinery and equipment
Investment securities
Cash and time deposits
Time deposits as construction contract guarantees
Total

51

TAKUMA 2020 ANNUAL REPORT

-

¥

129

$

-

-

24

-

150

150

1,378

-

274

-

63
¥

2020

213

86
¥

663

584
$

4,319

¥

80
¥

80

2020
37

$

-

80
¥

117

735
$

735

Long-term debt as of March 31, 2020 and 2019 was as follows:
Thousands of U.S. dollars
2019

¥

-

Unsecured

¥

262
¥

262

2020
-

$

342
¥

342

2,409

$

2,409

The annual average interest rate applicable to bank loans at March 31, 2020 and 2019 was as follows:
2020

2019

Short-term loans payable

0.8%

0.6%

Current portion of long-term debt

1.0%

2.0%

Long-term debt

3.3%

2.6%

11. 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 basedon 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, 2020 and2019 was as follows:
Thousands of U.S. dollars
2019

¥

9,110

¥

2020

8,826

$

83,708Service cost

601

600

5,519

Interest cost

49

48

453

Actuarial loss (gain)

6

(4)

53

(374)

(360)

(3,434)

Beneﬁts paid
Balance at March 31, 2020 and 2019

¥

9,392

¥

9,110

$

86,299Movement in net deﬁned beneﬁt liability of plans applying the simpliﬁed method for the years ended March 31, 2020 and 2019 was asfollows:
Thousands of U.S. dollars

Millions of yen
2019

2020
Balance at April 1, 2019 and 2018¥

Retirement beneﬁt costs

636

¥

2020
580

$

5,843

88

102

809

Contributions paid by the employer

(24)

(22)

(222)

Beneﬁts paid

(37)

(35)

(340)

2

11

Other
Balance at March 31, 2020 and 2019

¥

665

¥

636

Financial Information

2019

2020

$

2019
-

Unsecured

Balance at April 1, 2019 and 2018

2020

4,319

Thousands of U.S. dollars

Millions of yen
2020

2020

Thousands of U.S. dollars

Millions of yen

645

Millions of yen(2) Available-for-sale securities sold for the years ended March 31, 2020 and 2019 were as follows:
Information on the available-for-sale securities sold for the year ended March 31, 2019 is not provided because there was no
signiﬁcant gain.

$

The current portion of long-term debt as of March 31, 2020 and 2019 was as follows:

Secured

6,417

Total

¥

Millions of yen

Book value
¥

470

2020
645

2020

Securities with book values exceeding acquisition costs：
Equity securities¥

470

Millions of yen
As of March 31, 2019-

Unsecured

5,858

Securities with book values not exceeding acquisition costs：
Equity securities

SecuredDifference

Securities with book values exceeding acquisition costs：
Equity securities

2019

2020

(1) Acquisition costs and book values of available-for-sale securities with available fair values as of March 31, 2020 and 2019 were as
follows:
Millions of yen
As of March 31, 2020

Thousands of U.S. dollars

Millions of yen

8. Securities

23
$

6,113

1,962

TAKUMA 2020 ANNUAL REPORT

52

Financial Statement
Reconciliation from retirement beneﬁt obligations and plan assets to net deﬁned beneﬁt liability as of March 31, 2020 and 2019 was asfollows:
Thousands of U.S. dollars

Millions of yen
2019

2020
Funded retirement beneﬁt obligations

¥

597

¥

2020
589

$

5,486

(426)

(414)

171

175

1,573

Unfunded retirement beneﬁt obligations

9,886

9,571

90,839Total net deﬁned beneﬁt liability (asset) at March 31, 2020 and 201910,057

9,746

92,412

Net deﬁned beneﬁt liability

10,111

9,746

92,906

Plan assets

Net deﬁned beneﬁt asset
Total net deﬁned beneﬁt liability (asset) at March 31, 2020 and 2019(54)¥

10,057(3,913)

¥

9,746

(494)
$

92,412Retirement beneﬁt costs for the years ended March 31, 2020 and 2019 were as follows:
Thousands of U.S. dollars

Millions of yen
2019

2020
Service cost

¥

601

¥

600

$

48

453

Amortization of actuarial differences

138

139

1,272

Amortization of prior service cost

(4)

(4)

(36)

88
¥

872

102
¥

Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Law, all additional paid-in capitaland all legal earnings reserve may be transferred to other capital surplus and retained earnings, respectively, which are potentiallyavailable for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the nonconsolidated ﬁnancial statementsof 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.

14. Provision for losses on sales contracts
Provision for losses on sales contracts included in cost of sales for the years ended March 31, 2020 and 2019 was as follows:
Millions of yen

885

809
$

2020

5,519

49

Total retirement beneﬁt costs for the ﬁscal years ended March 31, 2020 and 2019

Under the Law, legal earnings reserve and additional paid-in capital can be used to eliminate or reduce a deﬁcit or be capitalized by aresolution of the shareholders' meeting.

2020

Interest cost

Retirement beneﬁt costs based on the simpliﬁed method

Under the Japanese Corporate Law (the “Law”), in cases in which a dividend distribution of surplus is made, the smaller of an amountequal to 10% of the dividend or the excess, if any, of 25% of common stock over the total of additional paid-in capital and legal earnings
reserve must be set aside as additional paid-in capital or legal earnings reserve. Legal earnings reserve is included in retained earnings
in the accompanying consolidated balance sheets.

8,017

¥

Thousands of U.S. dollars
2019

2,199

¥

2020

1,400

Research and development expenses are charged to income as incurred. Such expenses included in cost of sales and selling, general andadministrative expenses for the years ended March 31, 2020 and 2019 were as follows:
Millions of yen

Remeasurements of deﬁned beneﬁt plans for the years ended March 31, 2020 and 2019 were as follows:

Prior service costs¥(4)

Actuarial gains and losses

¥

2020
(4)

133

$

143

(35)
1,219

Total remeasurements of deﬁned beneﬁt plans for the ﬁscal years ended
March 31, 2020 and 2019

¥

129

¥

139

$

1,184

Accumulated remeasurements of deﬁned beneﬁt plans as of March 31, 2020 and 2019 were as follows:
Millions of yen
Prior service costs yet to be recognized2¥

Actuarial gains and losses yet to be recognized
Total balance at March 31, 2020 and 2019

(538)

2020
6

¥

(540)
¥

Thousands of U.S. dollars
2019

2020

(667)

18

$

(673)
¥

(4,961)$(4,943)The principal actuarial assumptions at March 31, 2020 and 2019 were as follows:
2020

2019

Discount rate

principally 0.64%

principally 0.64%

Expected rate of salary increase

principally

principally

6.8%

6.7%

(3) Deﬁned contribution plan
The amount of contribution required for the deﬁned contribution plans of the Companies for the years ended March 31, 2020 and2019 was ￥139 million ($1,277 thousand) and ￥135 million, respectively.

The Companies were contingently liable under guarantees for bank loans of afﬁliated companies and other companies as of March 31,
2020 and 2019 as follows:
Thousands of U.S. dollars

Millions of yen
2019

Unsecured

¥

179

¥

2020
209

$

1643

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

53

TAKUMA 2020 ANNUAL REPORT

Thousands of U.S. dollars
2019

1,154

2020
961

¥

$

10,605

16. Income taxes
The Companies are subject to a number of taxes based on income, which, in the aggregate, indicated a statutory rate in Japan ofapproximately 30.6% for the years ended March 31, 2020 and 2019.
The signiﬁcant differences between the statutory tax rate and the Companies' effective tax rate for ﬁnancial statement purposes wereset forth in the table below.
2020
2019
Statutory tax rate
30.6%
30.6%
Nondeductible expenses
Dividend income
Equity in earnings of afﬁliated companies
Council tax
Tax credits
Valuation allowance
Change in scope of consolidation
Other
The Companies' effective tax rate

2.0
(1.4)
(0.7)
0.7
(1.8)
(4.7)
2.1
26.8%

1.7
(0.5)
(1.3)
0.6
(2.3)
(1.7)
(10.0)
2.3
19.6%

Components of the Companies' deferred tax assets and liabilities as of March 31, 2020 and 2019 were as follows:
Millions of yen
Deferred tax assets:
Net deﬁned beneﬁt liability
Allowance for doubtful accounts
Accrued cost of sales
Other
Total deferred tax assets
Valuation allowance
Net deferred tax assets
Deferred tax liabilities:
Unrealized gains on securities
Valuation difference in land of consolidated subsidiary
Other
Total deferred tax liabilities
Net deferred tax assets

2019

2020
¥

¥
¥

¥

3,084
1,891
1,424
4,959
11,358(3,040)8,318¥(1,649)(176)(1,825)
6,493

¥

¥

¥

Thousands of U.S. dollars
2020

2,985
1,844
1,553
4,736
11,118(3,788)7,330$(2,363)(140)(180)(2,683)
4,647

$

$

$

28,33817,38013,08245,564
104,364(27,937)
76,427

Financial Information

12. Contingent liabilities

2020

¥

Thousands of U.S. dollars
2019

2020

20,204

15. Research and development expenses

2020

Millions of yen$(15,147)(1,618)(16,765)
59,662The main change in the valuation allowance is the decrease in the valuation allowance related to the ｌess allowance for doubtful accounts.

TAKUMA 2020 ANNUAL REPORT

54

Financial Statement(2) Basis of measurement about reported segment proﬁt or loss and other material items
Accounting methods used for reporting segments are the same those explained in the Note 2, “Summary of signiﬁcant accounting
policies.”

17. Comprehensive income

Proﬁts of reporting units are operating income. Internal revenue and transfers between reporting segments are recorded using
prevailing market prices.

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

Millions of yen
2019

2020

(3) Information about reported segment proﬁt or loss and other material items
Reportable segment information for the years ended March 31, 2020 and 2019 was as follows:

2020

Millions of yen

Unrealized gains on securities
Increase (decrease) during the year¥

Reclassiﬁcation adjustments
Subtotal, before tax
Tax (expense) or beneﬁt
Subtotal, net of tax¥(1,672)¥(2,552)$(15,363)

(668)

(0)

(6,139)(2,340)(2,552)(21,502)

715

780

6,568

(1,625)¥(1,772)$(14,934)¥

Reclassiﬁcation adjustments
Subtotal, before tax
Tax (expense) or beneﬁt
Subtotal, net of tax

¥

(7)

¥

82

$

(60)

-

-

-

(7)

82

(60)

2

(24)

19

(5)

¥

58

$

(41)

¥

5

¥

(9)

$

42

Reclassiﬁcation adjustments

-

-

-

Subtotal, before tax

5

(9)

42

Tax (expense) or beneﬁt

-

-

-

Subtotal, net of tax¥ 107,898¥

Package
BoilerOutside customers
Intersegment
Total

1,127

¥

¥

5

¥

(9)

$

42

¥

(6)

¥

4

$

(53)

Reclassiﬁcation adjustments

135

135

1,237

Subtotal, before tax

129

139

1,184

Tax (expense) or beneﬁt

(40)

(43)

(362)

Subtotal, net of tax
Total other comprehensive income

Total

Adjustment

Consolidated

17,822¥

7,607¥ 134,454-¥ 134,454

¥

226

16

47

233

522

(522)

-

108,124

1,143

17,8697,840

134,976(522)

134,454¥

10,619

¥

(202)

¥

966

¥

384

¥

11,767¥(2,167)

¥

9,600

¥

731

¥

5

¥

154

¥

21

¥

911

¥

6

¥

917

Others:Depreciation

Millions of yen
Year ended March 31, 2019

Domestic
Environment
and Energy

Overseas
Environment
and Energy

Package
BoilerOutside customers¥

Intersegment
Total
Reportable segment income

93,558

¥

3,057

¥

Equipment
andSystem Business

Total

Adjustment

Consolidated¥¥

89(1,536)¥¥96(1,627)$$822(14,111)

16,868¥8,468¥ 121,951-¥ 121,951

¥

166

-

87

368

621

(621)

-

93,724

3,057

16,955

8,836

122,572(621)

121,951¥

12,405

¥

164

¥

905

¥

362

¥

13,836¥(2,232)¥

11,604

¥

574

¥

10

¥

159

¥

20

¥

763

¥

35

¥

798

Others:Depreciation

Remeasurements of deﬁned beneﬁt plans
Increase (decrease) during the year

Equipment
andSystem Business

Sales:

Foreign currency translation adjustments
Increase (decrease) during the year

Overseas
Environment
and Energy

Sales:

Reportable segment income (loss)

Deferred gains and losses on hedges
Increase (decrease) during the year

Year ended March 31, 2020

Domestic
Environment
and Energy

Thousands of U.S. dollars
Year ended March 31, 2020

Domestic
Environment
and Energy

Overseas
Environment
and Energy$ 991,441$

Package
BoilerEquipment
andSystem Business

Total

Adjustment

Consolidated-$ 1,235,453

Sales:
Outside customers
Intersegment
Total
Reportable segment income (loss)

10,354$ 163,757$

69,901$ 1,235,453

$

2,069

151

433

2,139

4,792

(4,792)-

993,510

10,505

164,190

72,0401,240,245(4,792)

1,235,453$ 108,127$ (19,912)$

88,215

60

$

8,427

$

97,579$(1,860)

$

8,877

$

3,531

$

6,714

$

47

$

1,412

$

194

Others:18. Segment information(Supplemental information - Accounting Standard for Disclosures about Segments of an Enterprise and Related Information)

Domestic Environment and Energy Business
General waste treatment plants, industrial waste treatment plants, waste recycling plants, wastewater treatment plants, sludge
combustion plants, biomass power plants and gas-turbine cogeneration systems

$

8,367

$

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 reportablesegments.
Financial Information(1) General information about reportable segments
In the Group, businesses for which separate ﬁnancial information is available are grouped into the following four reporting
segments in accordance with the similarity of products and services of the respective business. The results of each reporting
segment are reviewed periodically by the Board of Directors to assess the segment's business performance.

Depreciation

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.

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

55

TAKUMA 2020 ANNUAL REPORTTAKUMA 2020 ANNUAL REPORT

56

Financial Statement(Related information)
Reportable segment information for the years ended March 31, 2020 and 2019 was as follows:(1) Information about products and services
Disclosure of this information is omitted since similar information is disclosed in Note 18, “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 informationis omitted.
（Information related to noncurrent asset impairment loss by reporting segment）
Not applicable（Information related to amortization and unamortized balance of goodwill）
Not applicable（Information related to gain on negative goodwill by reporting segment）
Not applicable

Financial Information

57

TAKUMA 2020 ANNUAL REPORTTAKUMA 2020 ANNUAL REPORT

58

Financial Information

59

TAKUMA 2020 ANNUAL REPORTTAKUMA 2020 ANNUAL REPORT

60

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