Takuma Co., Ltd.

Copyright 2024 TAKUMA Co., Ltd. All Rights Reserved.

May 2024

Contents

1.

Takuma Group Management Principles andLong-Term Vision

P.2

Medium-Term Management Plan
8. 14thStrengthening the Management Foundation

2.

Value Creation Process for Realizing theLong-Term Vision

P.3

9.

3.

Reflections on the 13th Medium-Term
Management Plan

P.4

10. Capital Policy

P.23

4. Business Portfolio (Our Vision for 2030)

P.7

11. ESG Initiatives

P.26

Medium-Term Management Plan
5. 14thPositioning and Policies

P.8

Medium-Term Management Plan
6. 14thFinancial Targets

P.9

Medium-Term Management Plan
7. 14thBusiness Strategies

P.12

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Management that is Conscious of Cost of
Capital and Stock Price

P.16
P.19

1

Takuma Group Management Principles and Long-Term Vision
Management 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 are needed and recognized as
valuable in society.
We will address social andenvironmental issues (ESG issues)
through businesses that leverage theGroup’s strengths, viewing theresolution of these issues as anopportunity for growth,

while also increasing ourcompany’s economic value.

Vision2030
We aim to maintain our role of being an indispensable presence in society
as a leading company in the field of renewable energy utilization andenvironmental protection and reach an ordinary profit level of JPY 20.0
billion.
Copyright 2024 TAKUMA Co., Ltd. All Rights Reserved.

Keywords for realizing Vision2030
A great partner toour customers

Innovation oftechnologies andservices
Solving issues facedby our customers
and society

2Value Creation Process for Realizing the Long-Term Vision

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3

Reflections on the 13th Medium-Term Management Plan
Rolling Out Business Activities Contributing to Solutions to
Issues Faced by Our Customers and Society
EPC Business(Japan)Overseas
Business
Package Boiler/
Equipment andSystems Business

Strengthening the Management Foundation

 Municipal solid waste
treatment plants

7 orders received (Including primary equipment improvement)

Securing and development of human resources Energy plants

21 orders received (total power generation of 60 MW)
9 orders received (order amount of at least JPY 500.0 million)

 Group employees 3,925 (FY3/21)➡ 4,278 (FY3/24)

 Water treatment plants

Recurring
revenue modelbusinesses

Main Initiatives and Results

 Long-term O&M inoperation
 Number of energy plants
delivered Power retail business Energy plants, etc.
 Recovery from decreased
demand package boilers
 Semiconductor industrial
equipment

Municipal solid waste treatment plants
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23 facilities (Number as of end of March 2024)
65 facilities (Since start of Japan’s FIT program)
216GWh (Power supply in FY3/24)
4 orders received (2 in Thailand, 1 in Vietnam, and 1 in Taiwan)
JPY 16.8 billion in orders(FY3/22) ➡
JPY 18.6 billion (FY3/24)
3-year order amount of JPY 17.8 billion

Biomass power plants

 Enhancement of training menu andeducation system by rank and field Effective utilization of diverse humanresources and improvement of job
satisfaction

Partnerships
 Participating in the C2X project andcollaborating with partners on
decarbonization solutions
 Investing in venture funds for strategic returns
 Looking into M&As to help improve corporate
value(No results during period of 13th MediumTerm Management Plan)

Biomass boilers/Hydrogen-fired vacuum-type water heaters(Package Boiler)

R&D, manufacturing capabilities, and digitaltechnology
 Development of carbon capture and utilization
technology for realizing a decarbonized society Launch of operations at new Harima Factoryand Supply Lab Development of digital technology for
products and services to reduce manpower
requirements at waste treatment facilities

Compliance Reexamination of safety management inconstruction divisions and at operations
offices Ongoing educational activities

New Harima Factory4Reflections on the 13th Medium-Term Management Plan

Numerical Targets and Results

3-year total ordinary profit target

Achieved the financial targets of
the 13th Medium-Term Management Plan

JPY 36.0 billion

JPY

3-year total orders received (reference)

36.4 billion(JPY billions)

Orders received (left axis)

Net sales (left axis)

Ordinary profit

JPY 468.0 billion

191.0

200
9.6

150
100

Orders received

JPY 31.9 billion

250

99.9

113.0

Ordinary profit (right axis)

116.3

Orders received

JPY 33.6 billion

JPY 517.2 billion

12.3

10.6

118.1

JPY

Ordinary profit

Orders received

JPY 36.4 billion

JPY 521.3 billion
16

179.8

177.1

11.6

Ordinary profit

521.3 billion

JPY 450.0 billion

121.9

148.8
10.3 134.4

192.2

188.5
11.0

146.7

168.5
10.6 134.0

14

14.6

142.6

160.5

149.1

11.1

12
10
8
6
4

50

2
0

2015

2016

2017

11th Medium-Term Management Plan
Steady expansion in terms of both quantity and quality

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2018

2019

2020

12th Medium-Term Management Plan

Strengthening of corporate capability to facilitate steady growth

2021

2022

2023

0

13th Medium-Term Management Plan
Preparation for further growth5

Reflections on the 13th Medium-Term Management Plan

Results by Segment

Although results fluctuate from year to year depending on the number of EPC projects and the timing of completion, orders received,
net sales, and operating income have all remained strong.
12th Medium-Term Management Plan
Equipment and Systems(JPY billions)

Package Boiler
Overseas Environment and Energy

6%

Municipal solid waste treatment plants(Engineering, Procurement, and Construction)

13%

1%

Water Treatment Plants, etc.

6%13th Medium-Term Management Plan

27%

Net sales

JPY 403.1

Package Boiler

Domestic Environment
and Energy

80%billionOverseas Environment and Energy

7%

Municipal solid waste treatment plants(after-sale service)

20%

Orders received
Domestic Environment and Energy
Overseas Environment and Energy
Package Boiler
Equipment and Systems
Net sales
Domestic Environment and Energy
Overseas Environment and Energy
Package Boiler
Equipment and Systems
Operating profit
Domestic Environment and Energy
Overseas Environment and Energy
Package Boiler
Equipment and Systems*Adjustments omitted

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FY2019
148.8
123.1
1.3
17.9
6.7
134.4
108.1
1.1
17.8
7.8
9.6
10.6
(0.2)
0.9
0.3

FY2020
188.5
160.5
0.8
17.5
10.1
146.7
120.7
1.1
16.9
8.2
10.4
11.4
(0.1)
0.6
0.8

3-year total
517.2
437.3
3.0
52.9
25.5
403.1
322.6
5.3
51.7
24.9
31.6
34.4
(0.1)
2.5
1.6

Municipal solid waste treatment plants(Engineering, Procurement, and Construction)

22%

Net sales

JPY 425.9

Domestic Environment
and Energy

81%billion(FY2021-2023 total)
Municipal solid waste treatment plants(after-sale service)

Energy plants

22%

27%

FY2018
179.8
153.6
0.7
17.4
8.5
121.9
93.7
3.0
16.9
8.8
11.6
12.4
0.1
0.9
0.3

1%

6%

12%

Water Treatment Plants, etc.

(FY2018-2020 total)
Energy plants

Equipment and Systems(JPY billions)

Orders received
Domestic Environment and Energy
Overseas Environment and Energy
Package Boiler
Equipment and Systems
Net sales
Domestic Environment and Energy
Overseas Environment and Energy
Package Boiler
Equipment and Systems
Operating profit
Domestic Environment and Energy
Overseas Environment and Energy
Package Boiler
Equipment and Systems

30%

FY2021
192.2
164.8
2.0
16.8
8.9
134.0
108.6
1.0
16.4
8.5
9.9
10.9
(0.2)
0.6
0.6

FY2022
168.5
130.2
5.9
18.4
14.3
142.6
115.9
1.3
17.3
8.3
13.8
14.8
(0.1)
0.9
0.8

FY2023
160.5
131.5
2.2
18.6
8.4
149.1
119.1
2.4
18.4
9.4
10.2
11.2
0.1
1.1
0.3

3-year total
521.3
426.7
10.2
53.8
31.6
425.9
343.8
4.7
52.3
26.3
33.9
37.0
(0.2)
2.7
1.8

*Adjustments omitted

6

Business Portfolio

Vision2030: Our Vision for 2030

Achieve further expansion with recurring revenue model businesses as the core driver of growth for Vision2030.
Work on expanding the EPC business at the same time as recurring revenue will increase to achieve ordinary profit of JPY 20.0 billion by
FY3/2031.
Vision2030: Growth of net sales
13th MTP

14th MTP

15th MTP

Ordinary profit(JPY billions)

Ordinary profit
JPY 11.1 billion
ROE 8.3%

Ordinary profit
JPY 14.0 billion
ROE at least 9.0%

149.1
9.4
18.4
2.4
56.3

62.8

FY3/2024*Adjustments omitted

Vision 2030

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165.0
11.8
19.7
4.0

JPY 20.0 billion
ROE at least 12.0%

200.0
13.0
22.0
10.0

FY3/2027

Equipment and Systems Business
Package Boiler Business
Overseas Environment and Energy Business

Positioning

6.5%

Ongoing business

11.0%

Ongoing business

5.0%

Expand primarily in Thailand, Taiwan, and emerging countries,
developing it into a pillar of the Group’s business(Steady expansionof revenue)(Steady expansionof revenue)

Future business(Medium- to long-term
perspective)

70.0

62.0

68.0

Share

85.0

Domestic Environment and Energy Business

77.5%

Maintain and expand position
as a leading company

35.0%Core business

42.5%

Growth business

EPC
Business

Recurring
Further expansion as a core
revenue model
driver of growthbusinesses(Growth driver)FY3/2031

7

14th Medium-Term Management Plan

Positioning and Policies

Challenges for achieving Vision 2030 include a lack of human resources. In the 13th Medium-Term Management Plan, we paved the way toward growth toresolve these challenges by assessing the business environment and strengthening recruitment. The 14th Medium-Term Management Plan is positioned tomaterialize the growth story for realizing the vision by prioritizing investment of management resources into receiving orders for municipal solid waste
treatment plants (renewals and primary equipment improvement) and establishing a revenue model that maximizes the use of recurring revenue while
formulating and implementing measures to solve various challenges.
13th MTP

2021

2022

Planting seeds

2023

2024

14th MTP

2025

Development

2026

2027

15th MTP

2028

Obtainment

2029

Vision20302030

Orders received

400

Net sales
Ordinary profit

350

25

Preparation for further growthMaterialization of the growth story

20.0
20

(JPY billions)
300

14.6

250

192.2
10.6

200

134.0

150

168.5
142.6

11.1
160.5
149.1

230.0
12.0

180.0 12.0

143.0

14.0
190.0

Obtaining
results

165.0

152.0

200.0

15

10

100

5

50

0

0

2021

2022

2023

Business Strategy

Further strengthening of existing
businesses

2024

2025

2026

2027

2028

2029

2030

Basic Policy
1 Maintaining and expanding our market position in the EPC Business
2 Establishing a revenue model that fully utilizes recurring revenue
3 Steadily expanding revenue in the Package Boiler Business andAddressing future changes in theenvironment

Equipment and Systems Business

4 Building a track record for the future in international business
5 Promoting strategic M&As and creating new businesses
1 Securing and development of human resources

Management foundation enhancement
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2 Knowledge management
3 Compliance and risk management8

14th Medium-Term Management Plan

Financial Targets (Summary)In addition to ordinary profit, new targets for orders received and return on equity (ROE) are set in the 14th Medium-Term
Management Plan.
: Main target

13th MTP

14th Medium-Term Management Plan

( 3-year total)

3-year total

Ordersreceived

521.3

600.0

230.0

180.0

190.0

Net sales

425.9

460.0

143.0

152.0

165.0

Operatingprofit

33.9

35.6

11.2

11.2

13.2

Ordinary
profit

36.4

38.0

12.0

12.0

14.0

ROE

8.3%

at least 9%

8.0%

8.0%

9.1%

(JPY billions)(FY3/2024)(FY3/2027)

FY2024FY2025

FY2026

ROE = Profit / Equity capital
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9

14th Medium-Term Management Plan

Profit Variance Analysis

Although we expect an increase in SG&A expenses such as personnel and R&D expenses, we also expect an increase in profit due tohigher gross profit in the EPC Business and recurring revenue model businesses.
Increased profit
mainly in Package
Boiler, etc.

Breakdown of ordinary profit variance (3-year total)(JPY billions)Overall strong
growth in Domestic
Environment andEnergyIncrease in personnel
and pay raises
Promotion ofdevelopment oftechnologies for capture
and use of CO2
Increased businessactivity expenses,
costs, etc.

SG&A
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Profitability improved
across the EPC business

Increased burden
from construction of
new Harima Factory

Gross profit

10

14th Medium-Term Management Plan
(JPY millions)

Financial Targets Forecasts by Segment

FY2024FY2025

FY20263-year total

Orders received
Total

230,000

180,000

190,000

600,000

Domestic Environment and Energy

198,700

146,700

155,000

500,400

Overseas Environment and Energy

4,000

4,000

4,000

12,000

Package Boiler

18,80019,30020,00058,100Equipment and Systems

9,000

10,50011,50031,000

Total

143,000

152,000

165,000

460,000

Domestic Environment and Energy

109,400

118,900

130,000

358,300

Overseas Environment and Energy

5,000

4,000

4,000

13,000

Package Boiler

18,60019,10019,70057,400Equipment and Systems

10,50010,50011,80032,800Total

11,200

11,20013,20035,600

Domestic Environment and Energy

12,30012,60014,40039,300Overseas Environment and Energy

300

0

0

300

1,000

1,050

1,100

3,150

700

700

900

2,300

Net sales

Operating profit

Package Boiler
Equipment and Systems*Adjustments omitted

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11

14th Medium-Term Management Plan Business Strategies

Market Environment

We expect the market environment for our business to be generally favorable and strong.
14th Medium-Term Management Plan period (FY2024-2026)

Municipal solid
waste treatment
plantsDomestic
Environment andEnergyEnergy plants++

Steady demand for renewal (rebuilds)
Ongoing demand for service life extension (primary equipment
improvement)

After-sale services+

Increase in operations businesses (DBO Business and O&M contracts)

EPC: FIT/FIP/Non-FIT－ Decrease in large-scale projects due to changes in the FIT program+

Ongoing demand for small to medium-sized FIP and non-FIT projects+ Ongoing renewable energy policy support for achieving carbon neutrality

EPC: For private consumption andindustrial waste treatment+

Ongoing demand for renewal due to aging plants and decarbonization+ Certain level of ongoing demand

After-sale services+

Increase in maintenance demand associated with increase in deliveries+ Ongoing maintenance demand at facilities in operation+++

Ongoing demand for renewal due to aging plants
Increased demand for products with high environmental performance
Progress and increase in private sector utilization+

Increased demand for renewable energy and non-fossil fuel-based power
associated with decarbonization

EPC

Water treatment plants
Power retail business－ Continued intense competition in the biomass power generation market

Overseas Environment and Energy * Southeast Asia+

Increased needs for utilization of diverse fuels－ Sluggish start in waste power generation market(Caused by system, funding, and other issues)

Package Boiler

Equipment and Systems
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Future++Japan: Certain level of ongoing renewal demand despite market maturity
Emerging countries: Increased demand for energy-saving products+

Certain level of ongoing demand from construction demand andincreased semiconductor capital investment－ Decreased demand for renewal due to low birth rate and aging society+ Increased demand for decarbonized facilities－ Decrease in number of facilities in operation (reorganization)+ Ongoing demand for operations businesses+ Further development of projects outsourced to the private sector+ Ongoing needs for energy conservation, energy creation, and resource
utilization+ Increase in comprehensive contracting of plant construction andoperation+ Certain level of ongoing demand+ Increased demand for waste disposal and electric power due to economic
growth and urbanization－ Japan: Market shrinkage due to low birth rate and aging society alongwith population decline+ Japan: Ongoing demand for energy-saving and decarbonization products+ Emerging countries: Market expansion with economic growth+ Certain level of ongoing demand (building equipment)+ Expansion of demand for semiconductor equipment with utilization anddevelopment of AI, etc.

12

14th Medium-Term Management Plan Business Strategies

Basic Policy ① and ②

In the Domestic Environment and Energy Business, which is a pillar supporting growth, we will increase EPC orders and link them tooperation management and maintenance to achieve a virtuous cycle between the EPC Business and recurring revenue model businesses.
▍ Priority measures bybusiness/field

Municipal solid
waste treatment
plantsDomestic
Environment
and Energy

Energy plants
Water treatment
plantsPower retailbusiness

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Basic policy 1

Maintaining and expanding
our market position in the
EPC Business Expansion of orders for renewal and primaryequipment improvement projects
 Review of measures to address market changes• 3 or more renewal project orders per year
• Steady response to primary equipment improvement projects• Support for decarbonization models and private sector
utilization

Basic policy 2

Establishing a revenue modelthat fully utilizes recurring
revenue Maintenance and expansion of orders for operation
management, maintenance, and long-term O&M
projects• Steady orders for regular maintenance work and DBO projects• Cost reduction and quality improvement with data utilization

 Ongoing orders for new small and medium-sized biomass
power generation plants and renewal of plants for private
consumption and industrial waste treatment plants

 Ongoing maintenance orders for delivered projects
 Enhancement of solution proposals, such as functional
improvements and energy savings

 Acquisition of orders for sewage sludge incineratorsand sand filtration facilities
 Expansion of share through technological superiority

 Ongoing maintenance orders, including regular
maintenance work- Expansion of revenue by expanding relative powersources, securing new customers, and expanding
service lineup

1314th Medium-Term Management Plan Business Strategies

Basic Policy ③ and ④

We will focus on expanding our product lineup, developing overseas operations, and securing and developing human resources tomaintain and expand orders in each business.
▍ Priority measures bybusiness/field

Package Boiler

Equipment and Systems

Basic policy 3

 Ongoing orders for renewal projects from expansion of product lineup, including low-carbon and decarbonization products
 Strengthening of maintenance business and overseas development

 Building equipment business (air conditioning, water supply and drainage sanitation equipment work): Strengthening of sales
capabilities, securing and development of engineers, and cost reductions
 Semiconductor industrial equipment business: Maintenance and expansion of domestic sales and strengthening of overseas sales

Basic policy 4

Overseas Environment andEnergyCopyright 2024 TAKUMA Co., Ltd. All Rights Reserved.

Steadily expanding revenue in the Package Boiler Business and Equipment and Systems
Business

Building a track record for the future in international business Acquisition of orders for biomass power plants through expansion of supported fuels
 Acquisition of orders for energy from waste plants, primarily in Thailand and Taiwan

1414th Medium-Term Management Plan Business Strategies

Basic Policy ⑤ M&As andAlliances / New Businesses

We will gather information with a focus on the business fields below to actively look into projects that match our business strategy.
Priority field

Segment(Business field)

Purpose/category
Functional enhancement

Expansion of business domain

Strengthening of existing businesses
and expansion of personnel

Expansion of peripheral businesses
and creation of new businesses

In-house production of key devices

Municipal solid
waste treatment
plantsDomestic
Environment andEnergyWater treatment
plantsManufacturers and engineering
companies

Energy plants
Power retailbusiness

Overseas Environment and Energy

Package Boiler

Equipment and Systems
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Expansion of service lineup and personnel

Local partners in EPC BusinessSupplementation of producing functions

New heat source systems

Securing of human resources andarea expansion(Equipment business)1514th Medium-Term Management Plan
Strengthening the Management Foundation

Basic Policy ① Securing andDevelopment of Human Resources

We will promote various human resources measures to expand resources in recurring revenue model businesses and the EPC Business.

Challenges

Human resources measures linked to management strategy

 Elimination of human resources gap(quantity and quality) to achieve
Vision 2030
 Establishment of internal
environment where diverse humanresources can play active roles overthe long term Fostering of a corporate culture that
accepts change
while passing down a good
corporate climate

Securing of diverse human resources matching
our business strategy
 Assumed number of necessary personnel*1(People)

784

943

1,200

NeutralStrengthening of foundation forhuman resources development

Further improvement of job satisfaction
and pleasant work experience Enhancement of training system by rank
and field, etc.

 Effective use of senior human resources
 Establishment of a personnel systemthat enables work-life balance

Sales
MaintenanceConstruction
Engineering

FY3/21

FY3/24

FY3/31(forecast)

Personnel to handle
EPC projects andmaintenance

Main KPI
Number of main career track andmanagement positions filled by women*2

At least

35*1. Non-consolidated basis, main career-track (does not include factory work positions, general
positions, or secondment). Each of the figures is for the beginning of the year.
*2. Cumulative total for April 1, 2021 to March 31, 2026.
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Utilization of parenting support programs*3

At least

25%

Employee engagement

Highest rating

50% or more

*4

*3. Average for FY3/2022 to FY3/2026.
*4. The percentage of respondents giving the highest rating for each question (on a 5-point scale) on job satisfaction and pride in thecompany in the Employee Attitude Survey.

16

14th Medium-Term Management Plan
Strengthening the Management Foundation••

Basic Policy ② Knowledge Management“Offensive” digital transformation (DX) has had some success in areas such as automated plant operation (AI development). We willcontinue efforts to create new value for further strengthening our competitiveness.
Regarding “defensive” DX, the entire Group will further promote digitalization to improve productivity and ensure smooth technology
succession with limited resources (human resources and time).

Establishment of competitive advantage using “offensive” and “defensive” approaches
Offensive DX

Defensive DX

Digitalization of products and services

Digitalization of operations

Providing new value to customers through the use of digital technology in plant
construction, operation, and other businesses

Business fields

Planning, design, procurement,
construction, operation, etc.

Enhancement ofwaste pit
management

MeasurePromotion of knowledge
management(Collection, storage, sharing, andutilization of knowledge and data)• Increase in work volume• Working hour control anddiversification of work styles• Establishment of systems and data
assets that are easy to utilize

Measure• Early development of new hires• Elimination of waste and control oferrors in business processes• Maintenance and improvement oftechnical capabilities

Time
Challenges

AI combustion control
SystemChallenges

Automatic sorting of glass bottles

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General Affairs, HR, Accounting, etc.

Human Resources

3D layer model

Solution Lab

Office field

Improved operational efficiency
through automation andproject/task management

17

14th Medium-Term Management Plan
Strengthening the Management Foundation

Basic Policy ② Knowledge Management

We are systematizing (visualizing) technical data, plant data, problem information, etc. as data assets to promote knowledge
management.

Harima Factory
Production control

EPC

Inventory control

Process control

Technical information
management

Cost control

O&M
Order control

Quality control

Operational
data control

Inspection history
management

Cost control

Promote visualization, utilization of data assets, and operational efficiency
by linking systems in each process of business fields.
Knowledge
management

Database creation• Standard specifications• Problem examples• Additional cost results, etc.

• Technology transfer• Individualization→Visualization

Coordination
Automation/
Standardization• Utilization of RPA• Utilization of 3D CAD andBIM/CIM

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Visualization ofproject and task
management
・Adjustment of workload

18

Management that is Conscious of Cost of Capital and Stock Price

Analysis ofcurrent
situation

 We recognize our cost of equity as around 6%.
 ROE has remained at or above 8%, and a certain equity spread has been secured*1.
 PBR is also stable at 1x or higher, but equity spreads are declining..
 The decline in spreads is due to an increase in equity capital and a decrease in financial leverage*2.
 We also recognize that there was incomplete understanding regarding the feasibility of the growth strategy and that efforts
to enhance balance sheet efficiency were not effectively communicated due to insufficient disclosure of cash allocations.

Policies

 Maintain and increase ROE in excess of cost of equity (FY3/2027: at least 9%; FY3/2031: at least 12%).
 To achieve the target ROE, we will increase balance sheet efficiency while improving profitability and maintaining a solid
financial foundation.
 At the same time, we will promote initiatives to reduce the cost of capital.

Initiatives

 Steady implementation of the 14th Medium-Term Management Plan to achieve Vision 2030.
(Working especially to maintain and expand our market position in the EPC Business, the source of our recurring revenue
model businesses)
 Optimal cash allocation to achieve both our growth strategy and capital efficiency.
 Specification of a quantitative policy on shareholder return.
 Further enhancement of IR activities, including effective dialogue with investors and enhanced disclosure information.
*1 Equity spread = ROE - Cost of equity*2 Financial leverage = Total assets / Equity capital

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19

Management that is Conscious of
Cost of Capital and Stock Price

Analysis of Current Situation (1/2)

ROE has remained above cost of equity, and a certain equity spread has been secured.
PBR has also remained above 1.0x, but equity spreads are declining.
PBR*1 over time

ROE / Cost of equity*2 / Equity spreads over time
Cost of equity
Equity spread

1.6

ROE

16.8%

1.4

1.4

1.4

14.1%

1.3
1.2

13.6%

1.2
1.2

1.2

10.9% 11.1%

10.9%

1.1

8.5%

1.0

7.2%
5.2%

4.9%

8.9%
3.9%

2014

2015

2016

2017

2018

2019

2020

2021

2022

*1 PBR = (Average month-end stock price over 12 months) / (Year-end net assets per share)

Copyright 2024 TAKUMA Co., Ltd. All Rights Reserved.

2023

5.9%

5.6%

FY3/15

FY3/16

6.4%

5.7%

6.2%

FY3/17

FY3/18

FY3/195.0%

FY3/20

9.9%
8.6%
2.6%

8.1%

8.3%
3.8%

2.4%

2.1%

6.0%

5.7%

6.1%

6.2%

FY3/21

FY3/22

FY3/23

FY3/24*2 Cost of equity calculated based on CAPM.
Beta values are measured over multiple time periods (weekly 1 year, weekly 2 years, monthly 3 years,
monthly 5 years, monthly 10 years), and the median value is used.

20

Management that is Conscious of
Cost of Capital and Stock Price

Analysis of Current Situation (2/2)

Over the past 15 years, we have enhanced our equity capital while providing a certain level of shareholder return to stabilize
management and improve creditworthiness. As a result, financial leverage decreased, and capital efficiency (ROE) declined.
ROE＝Net profit on sales × Total asset turnover × Financial leverage
FY3/10FY3/11

FY3/12

FY3/13

FY3/14

FY3/15

FY3/16

FY3/17

FY3/18

FY3/19FY3/20FY3/21

FY3/22

FY3/23

FY3/24

1.9%

7.8%

16.3%

19.7%

22.7%

16.8%

14.1%

13.6%

10.9%

11.1%

8.9%

8.6%

8.1%

9.9%

8.3%

Net profit on sales

0.5%

2.0%

4.2%

6.4%

9.2%

7.7%

6.9%

7.4%

6.6%

7.3%

5.5%

5.1%

5.5%

6.7%

5.9%

Total asset turnover

1.0

0.9

1.0

0.9

0.9

0.9

0.9

0.9

0.8

0.8

0.8

0.9

0.8

0.8

0.8

Financial leverage

4.3x

4.2x

4.0x

3.4x

2.8x

2.4x

2.3x

2.2x

2.0x

1.9x

1.9x

2.0x

1.9x

1.8x

1.8x

Net sales

95.1

89.1

101.0

96.3

96.3

103.8

113.0

116.3

118.1

121.9

134.4

146.7

134.0

142.6

149.1

Profit

0.4

1.8

4.2

6.1

8.8

8.0

7.8

8.5

7.8

8.8

7.4

7.5

7.4

9.6

8.7

Total assets

97.5

100.8

107.0

106.7

108.5

123.1

132.6

140.2

151.4

155.9

163.4

177.7

174.5

179.6

191.1

Equity capital

23.0

23.6

28.0

34.3

43.6

52.2

58.5

67.4

76.4

82.6

84.6

90.1

93.9

100.6

110.3

Equity ratio

23.6%

23.5%

26.2%

32.2%

40.2%

42.4%

44.1%

48.1%

50.3%

53.0%

51.8%

50.7%

53.8%

56.0%

57.7%

0

0

0.1

0.3

0.4

0.7

0.9

1.0

1.3

1.8

2.5

2.9

2.9

3.4

3.8

0

0

0

0

0

0

0

0

0

0

1.9

0

0.7

1.2

0

ROE

Financial figures (JPY billions)

Total dividends
Purchase oftreasury stock

Net profit on sales

22.7%

4.3

ROE
Asset turnover
Financial leverage

1.8

9.2%
1.0

5.6%

1.9%

0.8

0.5%
FY3/108.3%

FY3/11

FY3/12

FY3/13

FY3/14

FY3/15

FY3/16* The product of the three components of ROE may not equal ROE because the figures are rounded to the second decimal place.

Copyright 2024 TAKUMA Co., Ltd. All Rights Reserved.

FY3/17

FY3/18

FY3/19FY3/20FY3/21

FY3/22

FY3/23

FY3/2421

Management that is Conscious of
Cost of Capital and Stock Price
PolicyImprovement of
profitability

Enhancement ofbalance sheet
efficiency

Policy and Main Initiatives

Main Initiatives
 We will expand EPC orders, which is a prerequisite for further growing recurring revenue model businesses.
 In particular, we will give priority to investing management resources in municipal solid waste treatment plants,
for which a large amount of renewal demand is expected during the Medium-Term Management Plan period.
See “Business Portfolio” on p. 7 and “Positioning and Basic Policy of the 14th Medium-Term Management Plan” on p. 8

 Over the last 15 years, we’ve enhanced our financial foundation by building up a substantial internal reserve.
Looking ahead, we will maintain a solid financial foundation to back our EPC and long-term O&M businesses, all
the while ensuring a balanced distribution of profits between investments for growth including M&As andshareholder returns.
 Specify a new, quantitative policy on shareholder return.
 We will maintain the equity ratio at the 50% level with cash and deposits at a minimum level of roughly two to
three months’ worth of sales (JPY 30-40 billion).
See “Capital Policy | Cash Allocation” on p. 24 and “Capital Policy | Shareholder Return” on p. 25

Reducing cost of capital Through proactive investor relations, we will carefully explain our business environment and corresponding
business strategy to our investors so that they can expect stable returns over the long term, thereby bridging the
gap between cost of equity and the future business outlook.

Copyright 2024 TAKUMA Co., Ltd. All Rights Reserved.

22

Capital Policy
We will establish a quantitative policy based on an analysis of the current situation related to cost of capital and stock price.
We will enhance corporate value by balancing business growth and shareholder returns that meet market expectations with a solid
financial foundation.
1

2

3

Establishment of ROE targets
mindful of cost of capital

Establishment ofappropriate cash allocation

Establishment of newshareholder return policy

Establish target ROE based on therecognition that the cost of equity
over the past 10 years has beenaround 6%.

Secure a working capital and businessrisk buffer of roughly 2-3 months’
worth of sales (JPY 30-40 billion).

FY3/2027 ROE

At least 9%
FY3/2031 ROE

At least 12%

For cash and deposits above that level(operating CF + cash and balance inaccount), implement appropriate
allocation between investment ingrowth and shareholder return.

4

Maintenance of solid
financial foundation

to support the EPC and long-term O&M
businesses

Dividends

Establish as a target amountwhichever is higher calculated
based on dividend payout
ratio of 50% or dividend on
equity (DOE) ratio of 4.0%
Share repurchase

Equity ratio

Maintain at

the 50% level

Share repurchase totaling

approximately JPY 12 billion
over three years to improve
capital efficiency

Copyright 2024 TAKUMA Co., Ltd. All Rights Reserved.

23

Capital Policy

Cash Allocation

Focus on growth investments and shareholder returns and execute appropriate cash allocation to increase corporate value.

13th Medium-Term Management Plan period(JPY billions)14th Medium-Term Management Plan period
Sale of crossshareholdings

Sale of crossshareholdings, etc.

Capitalinvestment

OperatingCF*(13.0)+35.0

Operating
CF*

44.0

R&D
investment
(4.0)

SPC
investments
in capital

2.0

Actualcash anddeposits

42.0

End of
FY3/2021*Before R&D expenditure

21

+3.0

+2.0

+33.0

GrowthinvestmentsbillionJPY

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Capital investment(5.0)
R&D investment(6.0)
M&A / business investments(10.0)(10.0)

(5.0)

45.0

Dividends(14.0)

SPC
investments
in capital

Actualcash anddeposits

42.0

End of
FY3/2024

26

Purchase oftreasury stock(12.0)

Dividends

Purchase oftreasury stock Repaymentof(2.0)
borrowings

Shareholder
returnbillion
JPY

3.0

36.0
SPC
investments
in capital(11.0)

Actualcash anddeposits

5.0

31.0

End of
FY3/202724

Capital Policy
Shareholder return
policyShareholder Return

1

Enhancing shareholder returns and improving capital efficiency through stable dividends and share repurchase2

Establish as a target amount whichever is higher calculated based on dividend payout ratio of 50% or dividend on equity (DOE) ratio of 4.0%

3

Share repurchase totaling approximately JPY 12 billion over three years to improve capital efficiency

6.00

Interim dividend

Year-end dividend

Purchase of treasury stock

Dividend payout ratio

80.0%

Total return ratio

6,000(JPY YEN)(JPY millions)

48

5.00

120.0%

110.0%

70.0%

43

5,000

100.0%

60.0%
90.0%

4.00

36

36

4,000

80.0%

50.0%

31
38.8%

3.00

22

1.00

2
3.9%

2
2011

4

5.4%

2
2
2012

9

6
3
3

9.3%
5.6%

2013

5
4

11.6%

13
12.6%

7

6

16.9%

9

20.5%

35.8%

24
18

16
11

39.3%

34.3%

2.00

0.00

43.9%

18

Dividend payout
ratio of 50%
or DOE of 4.0%

24

70.0%

60.9%
3,000

49.3%
30.0%

1,252

20.0%

20.5%

12

Approx.
JPY 12 billion

60.0%

50.0%

40.0%

38.8%

18

48.7%

43.9%

1,999

2,000

30.0%

747

1,000

20.0%

10.0%

10.0%

5

6

7

10

13

18

18

19

24
0.0%

2014

3-year total

40.0%

2015

2016

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2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

0

0.0%

2018

2019

2020

2021

2022

2023

2024

2025

2026

25

ESG Initiatives

Environmental Initiatives

Continue to promote initiatives to address ESG issues through business activities by leveraging the Group’s strengths.
During the period of the 14th Medium-Term Management Plan, we will calculate Scope3 CO2 emissions and look into establishing a target
value that includes group companies.

Key issues (materiality)

Main Initiatives
 Provision of biomass power
plantsHelping combat climate
1change Proposals to improve energy
efficiency of customer facilities
and equipment Supply of renewable energy andCO2-free electric power Reduction of in-house CO2
emissionsE

14th Medium-Term Management Plan KPI

1. Reduction of CO2 emissions through our products and services
Amount of CO2 emissions that can be reduced through newly delivered power plants*1
FY2026Conserving resources
2 and protecting theenvironment

Copyright 2024 TAKUMA Co., Ltd. All Rights Reserved.

 Provision of high-efficiency
products and services with low
environmental impact
 Establishment of technology for
combustion of unused biomass
 Development of technologies
for capture and use of CO2

FY20302.5 million tons per year

*1 Biomass and energy from waste plants (including sludge) delivered by Takuma between FY2021 and FY2030

2. Reduction of in-house CO2 emissions
FY2026
FY2030Initiatives forEnvironmental

1.25 million tons per year

Net zero CO2 emissions at Takuma head office, Harima Factory, and branches
Net zero CO2 emissions*2 at all Takuma workplaces in Japan*2*3*2 Net zero CO2 emissions under Scope 1 and Scope 2*3 Takuma head office, branches, factories, and construction sites

3. Establishment of KPIs, including Scope 3 and group companies
Look into setting targets for important items falling within the scope that were estimated during the 14th
Medium-Term Management Plan period
Scope 1: CO2 directly emitted by the company through the use of fuel, etc.
Scope 2: CO2 indirectly emitted through the use of electric power, etc. supplied by other companies
Scope 3: CO2 generated within the supply chain, including suppliers and product users

26

ESG Initiatives

Social and Governance Initiatives

Add employee engagement and customer satisfaction as new KPIs.

Key issues (materiality)
Strengthening
relationships of trust with3
customers andcommunities

S

Initiatives forSocietyPursuing partnerships
4and innovation

5

Promoting activities ofhuman resources

Main Initiatives

14th Medium-Term Management Plan KPI
1-4 are for Takuma only

 Provision of high-quality
products and services thatsatisfy customers
 Development of technologies
and products sought after bysociety and customers
 Securing and development ofdiverse human resources Improvement of employee
satisfaction

1. Number of main career-trackand management positions filled by women
2. Utilization of parenting
support programs

G

Initiatives for
Governance

7 Strengthening corporate
governance

Copyright 2024 TAKUMA Co., Ltd. All Rights Reserved.

 Promotion of work style reform Enhancement of effectivenessof the Board of Directors
 Ongoing compliance education

At least

35 (total for FY2021-FY2025)

25% (average for FY2021-FY2025)

3. Employee engagement New

Highest rating

50% or more*1

4. Customer satisfaction New

Highest rating

60% or more*2

 Reduction of work accidents

Ensuring health and6safetyAt least

5. Number of fatal accidents

0

6. Number of serious compliance violations

0*1. The percentage of respondents giving the highest rating for each question (on a 5-point scale) on job satisfaction and pride in
the company in the Employee Attitude Survey.
*2. The percentage of respondents giving the highest rating for questions (on a 4-point scale) about customer service and overall
product quality in the Customer Satisfaction Survey.

27

The information provided in this document concerning performance forecasts and business plans is based on information currently available to the Company and certain
assumptions that the Company believes to be reasonable, and therefore includes risks and uncertainties. As such, be advised that various factors could cause actual
results to differ materially from these forecasts. The Company assumes no obligation to update or revise any forward-looking statements after publication of thisdocument except when required by applicable law. The copyright of this document belongs to the Company. Reproduction or adaptation for any purpose is prohibitedwithout the prior consent of the Company.
Copyright 2024 TAKUMA Co., Ltd. All Rights Reserved.

28