Message fromTop Management

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

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

■ Implementing CSR management andachieving sustained growth

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

management, and we strive to put them into practice. We
believe that we can resolve social issues, increase corporate
value, and achieve sustained growth by cultivating ahealthy and robust corporate culture and ensuring that theGroup’s executives and employees each maintain a highlevel of CSR awareness and incorporate that awareness into
their business activities.
Takuma has been a signatory to the United Nations
Global Compact since 2006, and we support its 10
fundamental principles in the 4 areas of human rights,
labour, environment, and anti-corruption. We will work todevelop our business while understanding and respecting
these globally shared principles.
In closing, in compiling this CSR Report we have sought
not only to provide a resource by means of which a broad
range of stakeholders could learn more about the Takuma
Group’s activities, but also to help each and every Group
employee think carefully about CSR and bring thatperspective to bear in his or her work. We at the Takuma
Group encourage readers to offer their candid views andadvice, which we will carefully review in order that wemight better resolve social issues and contribute to thesustained development of society.

July 2017■ Business environment
We expect to see continued demand for our principalbusinesses thanks to increased environmental awareness;
progress in initiatives to prevent global warming andconserve resources and energy; planned replacement of,and updates to, outdated facilities operated on behalf of
local governments; and energy policies that incentivize
biomass-fueled power plants, for example feed-in-tariff
programs for power generated using renewable energy.
In addition, adoption of the Paris Agreement at theUnited Nations Climate Change Conference (COP 21) andof Sustainable Development Goals (SDGs) at the United
Nations Sustainable Development Summit provides milestones along the path to a sustainable society. Takuma’s
technologies for processing waste and reducing carbon

3

TAKUMA CSR REPORT 2017

Takaaki KatoPresident and CEOTakuma Co., Ltd.

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

4

Company Motto

Value Technology, Value People, Value the EarthTakuma Group 11thMedium-Term Management
Plan — An Overview

Takuma Group 11th Medium-Term Management Plan — An Overview
1 Business Directions① Positioning of the 11th Medium-Term Management PlanManagement Principles
Takuma will strive for social contribution, corporate value enhancement, long-term corporate
development and the satisfaction of all stakeholders by providing goods and services that areneeded and recognized as valuable in society.
The founding spirit of Takuma was “Service to the nation through boiler manufacturing,”∗ which in present-day languagemeans “contribution to society by supplying goods and services that we yield.” This spirit can also be applied to theconcept of Corporate Social Responsibility (CSR) that in recent years has become a vital issue for corporate management.
The management principles of the Takuma group companies are all based on the said founding spirit.
∗ Service to the nation through boiler manufacturing
It was the Company Motto of Takuma, then Takuma Boiler Manufacturing Co., Ltd., founded by Mr. Tsunekichi Takuma, one of the ten great
inventors of Japan during the Meiji and Taisho periods (1868–1926).

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

Reinforcement of businessfoundation for stability
and profitability

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

FY2009 – FY2011

FY2012 – FY2014

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

Waste Treatment Plant Business1. We shall strive for proactive social contribution while establishing a harmonious coexistence with the global
environment as good corporate citizens.
2. We shall act in good faith in accordance with sound business custom, while complying with applicable laws andregulations and committing ourselves to fair, transparent and free competition, as well as conducting lawful
business activities.
3. We shall never have any relationship with antisocial forces or organizations, which may pose a threat to thesocial order and security of civil society.
4. We shall respect fundamental human rights and never practice discrimination.
5. We shall strive to provide high quality products and services, based on our advanced technologies, to attain highacclaim and confidence from our customers.
6. We shall strive to disclose corporate information to shareholders and investors through investor relations (IR) andother activities on a timely and equitable basis.
7. We shall strive to protect corporate properties as well as information, while never using either for improprieties or
any unjustifiable purpose other than normal business operations.

5Harmony with society
1. Coexistence with the global environment
2. Coexistence with international society
3. Practice of social contribution activities

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

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

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

TAKUMA CSR REPORT 2017

O&M and equipment
sale market
Existing
EPC market

O&M

Operation & Maintenance∗ DBO:

BiogasplantsWaste
treatment
plantsDBO

Design Build Operate

Large and Multifuelfired boilers

Water treatment
plants

Maintenance(Adding FIT customers)

Indonesia,Vietnam, etc.

Boiler plants(Japan, Thailand)
Package boilers

Sand filtration(Japan)Southeast Asia
Equipment
renewal demand
Sludge-fueled power
generation (Japan)

Water Treatment Plant Business

Maintenanceand chemicals

Eastern Europe

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

Package Boiler Business2 Policies and Perspectives of the 11th Medium-Term Management PlanPolicies

Takuma Group Code of Conduct

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

Overseas
markets∗ O&M:

Boiler Plant Business

New products,
peripheral markets,
overseas markets

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
the directors and employees remain aware of our social responsibilities and the circumstances surrounding us as well as
act in response to social ethics complying with applicable related laws and ordinances. Bearing the above in mind, we
have established and will promote this ethics charter as our code of conduct, aiming to realize our management
principles.

FY2018 and onwards❶ Maintenance and expansion of market position in the EPC
business❷ Expansion of businesses that generate base profits❸ Initiatives that target growth markets❹ Further enhancement of the company’s financial strength❺ Human resources management❻ Cultivation of a robust organizational culture

Perspectives❶ Creation of customer value❷ Ongoing innovation❸ Accommodation of environmental changes and risk
management

Achieving sustained growth

Creation ofcustomer value
OngoingInnovation

Accommodation ofenvironmental
changes and risk
management

Mmar aintenance and expansion ofket position in the EPC business
Leveraging
thecompany’s
totalcapabilities

Expansiothat ge n of businesses
nerate base profits

Initiatives that target
growth markets

Further enhancement of thecompany’s fi
nancial strengthManagementbase

Human resources management

Cultivation of a robust
organizational culture

TAKUMA CSR REPORT 20176

3 Financial Targets (Consolidated)(Billion JPY)

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

400

40300

30200

20100

100

9th Plan
Order Value(left scale)10th Plan

11th Plan

Sales(left scale)0

Ordinary Profit(right scale)(Billion JPY)

9th Medium-Term Management Plan results 10th Medium-Term Management Plan results

Management Plan targets

2010

2011

Total

2012

2013

2014

Total

FY2015 – FY2017

Order Value

70.5

97.0

90.4

257.9

109.2

148.0

113.7

371.0

(3-year cumulative total)

Sales

95.1

89.1

101.0

285.3

96.3

96.3

103.8

296.5

(3-year cumulative total)

Ordinary Profit

2.0

4.4

7.3

13.7

7.1

9.4

9.125.7(3-year cumulative total)

400 Billion JPY

360 Billion JPY
27 Billion JPY

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.
● DBO project volume is growing, and there is also growth inO&M services for existing facilities.

●Emphasis of Future Activities

Emphasis of Future Activities

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

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

Boiler Plant Business (Overseas)

Business Environment

Business Environment

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

●Emphasis of Future Activities

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

Emphasis of Future Activities

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

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

Waste Treatment Plant Business (Overseas)

Package Boiler BusinessBusiness Environment

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

Emphasis of Future Activities
Develop schemes for entering the market that are suited toeach country and region.
● Develop structures to facilitate market entry.
●7

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

Boiler Plant Business (Japan)●

TAKUMA CSR REPORT 2017●

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

Corporate Information

11th Medium-Term2009●Corporate Profile

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

The Takuma Group Network
Business Summary