This is a transcript of Takuma Co., Ltd. financial briefing for the fiscal year 2022 held on May 25,2023.
＜Speakers＞
Takuma Co., Ltd., the President and Representative Director and CEO, Hiroaki Nanjo

Thank you for taking time out of your busy schedule to join us today for TAKUMA’s FYE March2023 financial results briefing.
My name is Hiroaki Nanjo, the President, Representative Director and CEO.

Table of Contents

Today’s explanation will follow this table of contents. Some parts will be skipped due to timeconstraints.

First is an introduction to our Group. On pages 3 to 6, you’ll find the business overview, history, andbusiness model. I will skip these, so take a look when you have time.

Business SegmentHistoryPerformance trends

Business modelNext, let’s look at the consolidated financial highlights for FY2022 (FYE March 2023). Turn yourattention to page 8.

FY2022 (Ended 3/2023) | Financial Highlights

Looking at the consolidated results for FYE March 2023, both sales and profit were up, with net
sales of ¥142.6 billion and ordinary profit of ¥14.6 billion. The main factors were a change in theEPC project mix in the Domestic Environment and Energy Business and an increase in recurring
revenue model businesses.
Meanwhile, orders received came in at ¥168.5 billion, having declined due to fewer orders formunicipal solid waste treatment plant construction and operation projects.
The order backlog was up to ¥471.2 billion, with steady orders for long-term O&M such as
municipal solid waste treatment plant construction and operation projects, which account forroughly 50%.

FY2022 (Ended 3/2023) | Breakdown by Segment

These are the results by segment. The details are provided on pages 10 to 19. I will skip these, sotake a look when you have time.

Domestic Environment and Energy Business | Orders received / Order backlog

Domestic Environment and Energy Business | Net Sales / Operating Profit

Domestic Environment and Energy Business | Breakdown by Product / Service

Domestic Environment and Energy Business |Quarterly trend in Orders received / Net sales (Reference material)Overseas Environment and Energy Business | Orders received / Order backlog

Overseas Environment and Energy Business | Net sales / Operating profit

Package boiler Business | Orders received / Order backlog

Package boiler Business | Net sales / Operating Profit

Equipment and systems Business | Orders received / Order backlog

Equipment and systems Business | Net sales / Operating profit

Now I will talk about the 13th Medium-Term Management Plan, which started in FY2021, and theprogress made based on the financial results this year. Turn your attention to page 21.
13th Medium-Term Management plan (2021-2023)

The period of this plan is positioned as one for laying the groundwork for growth to achieve anordinary profit of ¥20 billion by FY2030 as set forth in the Takuma Group’s Long-Term Vision“Vision 2030." The numerical target is ¥36 billion in three-year cumulative ordinary profit.

13th Medium-Term Management plan | Progress

FY2022 was the second year of the plan. Ordinary profit came to ¥14.6 billion, representing steadyprogress toward achieving the target. The forecast for ordinary profit in FY2023 is ¥12 billion, so if
things continue as they are, we expect to achieve the target of ¥36 billion. We will strive to build itup even further from there.

Situation by Segment |Domestic Environment and Energy

Municipal solid treatment plants | Business Strategy

Next is the current business environment surrounding our Group.
First, in the Municipal Solid Waste Treatment Plant Business of the mainstay Domestic Environment
and Energy Business, demand continues for renewal and extending the service life of aging waste
treatment facilities. We expect 15 to 20 orders to be placed for the year. As for the total waste
treatment capacity of these facilities, we expect steady renewal demand of 3,000 to 4,000 tons perday.
In addition, from the viewpoint of utilizing the expertise of private companies, we are receiving anincreasing number of DBO orders are being placed where in addition to facility renewal, we take on
facility operations for about 20 years after completion, and we expect this to continue.

Situation by Segment |Domestic Environment and Energy

Municipal solid treatment plants | Business Strategy

Amid this business environment, our Group will seek to continue winning two to three renewal
orders per year in response to this demand. We will also aim to further increase the number oforders by increasing our resources, such as engineers and construction supervision personnel.

Situation by Segment
Domestic Environment and Energy

Municipal solid treatment plants | Business Strategy

As for recurring revenue model businesses, as of the beginning of FY2023, we have received 25
orders for long-term O&M, and 19 of these are currently in operation. Even at facilities for which
we have not signed O&M contracts, we aim to achieve further growth of recurring revenue modelbusinesses by proposing solutions that cater to our customers’ needs, such as switching to O&M
and working on performance improvements.
Situation by Segment
Domestic Environment and Energy

Municipal solid treatment plants | Main Order Received

These are the most recent major orders received. We will continue going after steady orders.

Situation by Segment
Domestic Environment and Energy Energy plants | Business Environment

Next, I will explain the conditions in the Energy Plant Business, which includes biomass powerplants.
Risks that impact customer plans have emerged, such as soaring biomass fuel prices. Currently,
however, there is continued demand for the construction of small- and medium-scale biomass
power plants in Japan, mainly using biomass fuel, as well as for maintenance after delivery.
Moreover, among customers with plants, demand has emerged for fuel conversion involving
switching from large boilers that use fossil fuels in response to soaring energy prices and efforts toreduce CO2 emissions.
This fiscal year, we expect most plans to involve small- to medium-scale plants producing 2 to 10
MW making use of the Feed-in Tariff scheme. Feed-in Premium-based plans are also gradually
coming together.

Situation by SegmentDomestic Environment and Energy

Energy plants | Business strategy

Since the launch of the Feed-in Tariff scheme, our Group has received orders for almost 80 plants.
We continue to receive maintenance orders for many of these projects after delivery.
We will continue to aim for stable orders for EPC and maintenance by offering proposals tailored tothe needs of our customers, such as Feed-in Tariff and Feed-in Premium projects, fuel conversion
projects, and Improvement work.
Situation by Segment
Domestic Environment and Energy Energy plants | Main orders received

These are the most recent major orders received. In FY2022, we received orders for Feed-in Tariff
projects as well as projects that will lead to future work, including fuel conversion projects and nonFeed-in Tariff projects.

Situation by Segment
Domestic Environment and Energy

Water Treatment Plants | Business strategy

Next, in the Water Treatment Plant Business, our flagship product, the step grate stoker typesewage sludge incineration and power generation system, received a series of awards in FY2022
amid growing demand for updating and extending the service life of sewage sludge treatment
facilities. Because it requires less auxiliary fuel, which is what fossil fuels are, than conventional
incinerators, it can contribute to the reduction of greenhouse gases. It has also been recognized for
its energy-saving performance and the ability to produce energy through power generation. We
will continue actively engaging in sales activities and tie them into orders received.

Situation by Segment
Domestic Environment and Energy

Power retail business | Business strategy

In the power retail business, we are contributing to stabilizing customers’ electricity bills andreducing CO2 emissions by procuring and supplying electricity generated at delivered waste
treatment plants and biomass power plants. We will continue to work on its stable growth as arecurring revenue model business.

Situation by Segment
Overseas Environment and Energy | Business strategy

Continuing on to the environment surrounding the Overseas Environment and Energy business,there is potentially robust demand for waste power generation in Southeast Asia in conjunction
with population growth and urbanization. There is also an increasing trend for governments toback business implementation. It has taken some time for the market to form, but we will continue
to develop a system for winning orders centered on local subsidiaries while also forming
partnerships with local companies.
In Thailand, the government is promoting the introduction of power generation from renewableenergy. Demand for biomass power generation is strong, especially among sugar mills. We willcontinue to focus on winning orders for new construction, renewals, and maintenance projects.

Situation by Segment
Overseas Environment and Energy | Business strategy

In regard to orders received, from FY2021 to FY2022, we received orders for the construction ofplants in Thailand and Vietnam in addition to equipment replacement work at waste power
generation plants. We will continue to go after at least one or two orders for new construction peryear to achieve profitability and growth in our Overseas Business.

Situation by Segment
Package Boiler Business / Equipment and System

This is the situation in our Package Boiler Business and our Equipment and Systems Business. We
are also seeking growth through the preservation and expansion of the scale of these businesses.

Strengthening the management foundation | Outline

As for strengthening the management foundation over the period of the current Medium-Term
Management Plan, we will continue to invest actively, particularly in hiring and training humanresources and in research and development of decarbonization technologies.
Strengthening the management foundation | Human Resources Investment

This is the status of our human resources investment. We will continue to work on enhancing ourcompetitiveness and expanding our resources through active investment in human resources,including hiring and training.

Strengthening the management foundation | R&D

As for research and development, we are working on decarbonization technology in addition toimproving our existing technologies. We are actively pursuing various research and development
projects, including CO2 supply facilities that use combustion gas from biomass power plants,
developing technologies for its as a raw material for city gas, and developing solid carbonization
technologies for its utilization as a raw material for chemicals like carbon black.
Strengthening the management foundation | Partnerships / Digital technologies

This is the status of our partnerships and the utilization of digital technology. We will also be
working actively on these to increase the added value of our existing businesses.

Medium-to long-term Roadmap

This is what we envision for net sales as the roadmap for achieving Vision2030 based on thebusiness environment and initiatives we have looked at so far. As a core growth driver, we will aim
for steady growth in each business, including further expansion of recurring revenue modelbusinesses and maintenance and expansion of the EPC Business. In addition, we will expand ourbusiness in the environment and energy field through new businesses and M&A.

Lastly, let’s look at the Financial forecasts and shareholder returns in FY2023 (FYE March 2024).

FY2023 (Ended 3/2024) | Results Forecasts

Looking at the market environment, we expect things to remain at a high level against thebackdrop of firm demand for renewal and service life extension of waste treatment plants and theconstruction of biomass power plants. As such, our forecast is for ¥170 billion in orders received.
Meanwhile, we expect net sales to increase to ¥146 billion and ordinary profit to decrease to ¥12billion. This expected decrease in profit is primarily due to changes in the EPC project mix in theDomestic Environment and Energy Business, increased investment in research and development
and human resources, and increased depreciation expenses associated with the operation of theNew Harima Factory.
Due to the nature of our business, progress on plant construction projects varies from year to year,
resulting in fluctuations in single-year performance. However, the market environment remains
strong, so we are continuing to work on expanding our resources, focusing on steadily winningorders and recurring revenue model businesses and investing in growth areas. As such, we believe
we can achieve sustainable and steady growth.

FY2023 (Ended 3/2024) | Results Forecasts by Segment

By segment, we are forecasting the figures you see here.
We will put every effort into achieving these targets.

Shareholder return

Concerning shareholder returns, our basic policy is to maintain stable dividends, taking into
consideration our business performance and financial position in a comprehensive manner. This
year we expect a decline in profit, but we still expect to achieve the targets of our Medium-TermManagement plan, so we plan to increase the dividend by ¥5, bringing the annual dividend to ¥48.
We expect the dividend payout ratio to increase to 46.2%.
One of our options is to purchase treasury stock, and we will do so flexibly based on the stock priceand other factors.

In closing

In conclusion, recurring revenue model businesses will grow steadily with the delivery of new plants
and orders for long-term O&M. We will continue to focus on these businesses as a growth driverand stable revenue base for our Group.
Furthermore, we aim to lay the groundwork for the future through investment in overseas
operations, research and development on decarbonization technologies, human resources, andmore, thereby achieving Vision2030 and ordinary profit of 20 billion yen by 2030.
Continuing to focus on environment and energy-related businesses, we will pursue sustainablegrowth together with our customers and society via ESG management.
Thank you for listening.
End