2019

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.

Contents

By passing down this philosophy over time and augmenting it with Takumaʼs technology, we
continue to create products with new value today.
Going forward, we will provide that value to customers through plants that take advantage of the3

Financial Highlights

proprietary technologies we have developed since our founding in areas such as combustion, waste

5

Message from Top Management

9

Takuma Group 12th Medium-Term Management Plan

treatment, and water treatment.

− An Overview■ Municipal solid waste treatment plants■ Industrial waste treatment plants■ General-purpose boilers

We support the realization of a recycling-oriented society
using advanced waste treatment technologies that meet theneeds of local communities.

Using advanced incineration technologies, we can eventreat toxic substances suitably and we are supporting theenvironmental protection efforts of industry.

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

Energy from Waste plant
Pyrolysis gasification andmelting plant● Resource recycling andcollection plant● Bulky garbage crushing plant● Incineration ash and fly ash
melting plant●●

Waste to solid fuel conversion
plant● Transition and intermediate
processing plant● Raw fuel (biogas) recovery plant● Various types of pollution
prevention equipment●●

Industrial waste treatment plant●

Steam Boilers (EQOS, Super EQOS)●

Vacuum-type Water Heaters (Vacotin Heater)●

Package Water-tube Boilers●

Flue and Smoke Tube Boilers (RE Boiler)●

Heat Medium Oil Boilers (Thermoheater)●

Radiation Heating Equipment (Strip Heater)

12

Company Outline

13

The Takuma Group Network

14

The History of Takuma

15

Introduction to Takumaʼs Businesses
1. Environmental Plant Business
2. Energy Plant Business
3. Overseas Business29

Corporate GovernanceDirectors and Executive Officers

Industrial waste treatment plant
Energy from Waste plant

Bulky garbage crushing plant

Vacotin Heater

Thermoheater

Super EQOS

Takumaʼs core technologies are utilized in various types ofboilers, starting with biomass boilers, as well as 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.

●

Waste heat boiler●

Fossil fuel boiler●

Power plant●

Sewage and wastewater●

Sludge treatment plant

treatment plant●

Sewage sludge-fueled power plant●

Building equipment●

Clean room

Various types of advanced●

Plant to process water that●

Air-conditioning equipment●

Clean devices

infiltrates final disposal sites●

Cleaning and drying devices●

Chemical filterssewage treatment plant

Biomass power generation boiler

Waste heat boiler

TAKUMA 2019 ANNUAL REPORT

Upflow moving-bed
filtration system

Sewage sludge-fueled
power plant

Compliance & CSR Promotion Structure
Risk Management Structure■ Air-conditioning equipment and clean systems

Biomass boiler

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

■ Water treatment plants●

Corporate Governance

RE Boiler■ Energy plants●

1

Plant that generates powerfrom industrial waste andprovides heat to a plantation

Chemical filters

Clean oven

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

Financial Information
Status of Business Activities
Financial Statement

Clean booths

TAKUMA 2019 ANNUAL REPORT

2

Financial Highlights

Trend in Principal Management Indicators

9,189

¥

10,974¥

10,030¥11,604$

104,551

0
Fiscal year
year

110th
'14

¥

9,449

¥

9,116

¥

9,646

¥

11,606¥

10,670¥12,334$111,128

Proﬁt attributable toowners of parent

¥

8,835

¥

8,030

¥

7,817

¥

8,551

¥

7,847

¥

8,854

$

79,772( in ofmillions
yen )Comprehensive income

¥

9,935

¥

9,398

¥

7,149

¥

9,937

¥

10,177

¥

7,325

$

66,00012,000

●

112th
'16

●

¥ 108,520

52,516¥ 123,127¥

58,809¥ 132,614¥

67,727¥ 140,201¥

76,726¥ 151,489¥

83,088¥ 155,989$

748,603

8,000
6,000

$ 1,405,431

9,189

Total assets

¥

111th
'15

¥

527.50¥631.53¥708.18¥815.77¥924.25¥ 1,000.34

$

9.01

2,000

Net income per share（JPY or USD）¥

106.86

¥

97.12

¥

94.55

¥

103.43

¥

94.93

¥

107.10$0.96

0Fiscal year
year

Overseas Environment and Energy Business
Equipment and Systems Business

40.2

42.4

44.1

48.1

50.4

53.0

53.0

22.7

16.8

14.1

13.6

10.9

11.1

11.1

Price-to-earnings ratio

6.9

9.7

10.7

10.5

12.3

12.3

12.3

Cash ﬂows frominvesting activities¥ (1,430)¥

Cash ﬂows fromﬁnancing activities¥ (5,867)¥ (3,707)¥ (2,900)

End-of-year balance of
cash and cash equivalents

¥

¥

¥

Number of employees

8,270

27,030¥21,727(160)

45,008

3,315

3,266

¥
¥

6,728
(445)

48,335
3,366

¥

9,590

¥

5,141

¥

10,817$¥ (1,382)$ (12,453)¥ (1,787)¥ (1,670)¥ (9,120)$ (82,164)

¥

¥

¥

$

143

57,132
3,447¥

60,283
3,609

61,027
3,619

in millionsof yen549,844)

140,000

97,460

(328)

¥

(

Domestic Environment and Energy Business

70,0000
Fiscal year
year●

Net sales

10,48812,405

11,727

114th
'18

113th
'17

(

in millionsof yen)10,000) Value of orders received

2,500

0

0
Fiscal year
year(

in millionsof yen)the exchange rate prevailing at March 31, 2019.

917

1,015

17,476

16,955

17,696

17,321

10,00016,724

1. U.S. dollar amounts are shown solely for the convenience of readers and are translated at the rate of ¥110.99 to U.S.$1.00,

17,165

Note:

904

2,000

10,000

1,000

5,000

TAKUMA 2019 ANNUAL REPORT

（154）

113th
'17

0

115th
'19

114th
'18

Net sales
Value of orders received

Operatingincome-500( in ofmillions
yen )0
Fiscal year
year

113th
'17

114th
'18

115th
'19

1,000

322

2. Ordinary proﬁt is a measure of accounting proﬁt that equals operating income plus other income minus other expenses,

3

500
163

Equipment and Systems Business( in ofmillions
yen )( in ofmillions
yen )

3,619
20,000except for extraordinary items under Japanese GAAP.

OperatingincomeValue of orders received

78

115th
'19

OperatingincomeNet sales

5,000

●

Net sales

Overseas Environment and Energy Business( in ofmillions
yen )

5,000

Package Boiler Businessin millionsof yen(Value of orders received

Operatingincome

●

8,041

¥

115th
'19

6,666

Cash ﬂows fromoperating activities

13.8%

Trend by Segment●

Return on equity(%)

114th
'18

3,070

-

7.2%

Package Boiler Business

2,222

-

113th
'17

153,628

-

112th
'16

93,724

-

111th
'15

148,892

-

110th
'14

90,075

-

115th
'19

76.5%

163,505

Capital adequacy ratio (%)

-

114th
'18

2.5%

90,643

Diluted net income per share（JPY or USD）

113th
'17

Net sales composition ratios

4,000

Net assets per share（JPY or USD）

112th
'16

Domestic Environment and Energy Business

8,223

43,8890
Fiscal year
year

115th
'19

(FY2018)

8,424

¥

114th
'18

Operating income

10,000Net assets

113th
'17

Financial Highlights

Ordinary proﬁt

111th
'15

799

¥

11,604

8,223¥

10,0308,424

10,974

¥

110th
'14

30,00030,000Operating income

121,951$ 1,098,753

00Fiscal year
year

113th
'17

229
114th
'18

8,567

¥ 121,951

60,0003,057¥ 118,199

60,0008,836¥ 116,309

March 2019

3,873

¥ 113,088

March 2019

7,141

¥ 103,875

March 2018

3,401

96,334

March 2017

7,697

¥

March 2016

118,199

90,000March 2015

116,309

March 2014

90,000113,088

120,000

120,000
103,875

of
of
of
of
of
of
of
( Millions) ( Millions) ( Millions) ( Millions) ( Millions) ( Millions) ( Thousands
yen
yen
yen
yen
yen
yen
U.S. dollars )( in ofmillions
yen )179,829

150,000

115th

115th

177,116114th

191,026

113th)

Net sales

96,334

Net sales

112th

●

99,919End of ﬁscal year

111th

(

in millionsof yen148,025

Fiscal year

110th

Value of orders received

113,763

Trend in Principal Management Indicators and Other Financial Data

●

500

361
115th
'19

0

TAKUMA 2019 ANNUAL REPORT

4

Message fromTop Management
Contributing to
the sustainable
development of society
by providing new value
the world needs

Assessing change in the businessenvironment and boosting our ability
to grow

Continuing to be a company that plays
an essential role in societyIʼd like to take advantage of this opportunity to describe
my basic approach to management as I take on these new
responsibilities.
First, I believe in the importance of respecting ourManagement Principles. The Takuma and Takuma GroupManagement 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.” That impetus
can also be found in our founding spirit of “Service to thenation through boiler manufacturing*,” and it means
contributing to the world through the goods and services
that we create. It also informs corporate social responsibility(CSR), which we have currently embraced as a key issue inthe companyʼs management. Companies must build andmaintain good relationships with a variety of stakeholders,
including customers, business partners, employees,
shareholders, and investors. Such relationships cannot berealized in a day. The first step is for the company to conduct
itself in a way that inspires trust on the part of stakeholders.

5

TAKUMA 2019 ANNUAL REPORT

Message from Top ManagementIʼm Hiroaki Nanjo, and I became President and CEO of
Takuma in April.
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 ordinary proﬁt of JPY 10 billion in FY2020,
has embraced a vision of building structures capable ofconsistently earning an ordinary profit of at least JPY 10
billion even as the business environment undergoes aprocess of significant change. As the final stage in our direct
to achieve that vision, we are working to implement the 12th
Medium-Term Management Plan (FY2018 to FY2020). That
effort includes a variety of business activities undertaken as
part of the Plan, which outlines a three-year period during
which we have sought to boost our corporate capabilities tofacilitate the achievement of our vision and consistent
growth afterwards based on a sure assessment of how thebusiness environment is likely to change in the future.

Through endless effort to provide new value after
conducting ourselves in line with the dictates of legal
compliance, impartiality, ethical values, and social mores
while ensuring transparency in decision-making andfulfilling the obligations of accountability, we must build andmaintain good relationships; only then will society
acknowledge the value of Takumaʼs continued existence. I
believe that management is founded on corporate
governance, compliance, and risk management.
Second, I embrace the practice of seeing things from botha short-term and a medium-/long-term perspective. As thebusiness environment continues to undergo significant
change, we are called upon to deal with those changes in an
appropriate manner and to generate results as we do so.
Additionally, as a publicly held company, we are required toincrease management efficiency and to improve our
performance. However, merely pursuing short-term profits inthe context of an effort to achieve long-term development of
the business while satisfying all stakeholders is unlikely tolead to sustained growth. We must cultivate a medium- andlong-term perspective and incorporate it into ourmanagement while reliably dealing with the immediate
opportunities and issues that present themselves to us. In
particular, the Groupʼs products̶Energy from Waste plants,
water treatment plants, and energy plants̶are key parts ofsocietyʼs underlying infrastructure, and as such they operate
for 20 to 30 years after being delivered to the customer. We
will continue to work to manufacture optimal products
through careful attention to all phases of the life cycle, fromdesign to construction and maintenance, in order to ensurethat customers can utilize these facilities for as long, and in
as effective a manner, as possible. At the same time, ESG
investment is attracting attention as a means of boosting
corporate value over the long term. We will contribute tosociety by focusing even more closely on developing andsupplying products and services that make contributions to
the environmental priorities of reducing environmental
impacts and lowering greenhouse gas emissions.
Third, I am committed to carrying on a good corporate
culture that allows all employees to pursue their jobs withenthusiasm and ambition while enjoying personal growth.
Takuma has created a culture that encourages such growthby allowing relatively inexperienced employees to take on
job responsibilities so that they can gain motivation andexperience a sense of accomplishment while being mentoredby supervisors and older colleagues. I look forward tocontinuing to develop an environment that allows each
Takuma employee to approach his or her job with a desire to
improve, to take full advantage of his or her skills andabilities, to grow through the companyʼs activities, and toenjoy a sense of motivation and happiness.

TAKUMA 2019 ANNUAL REPORT

6

Message fromTop Management

Value Technology, Value People, Value the Earth

Takuma will strive for social contribution, corporate value enhancement, long-term corporate development and thesatisfaction of all stakeholders by providing goods and services that are needed and recognized as valuable insociety.
The founding spirit of Takuma was “Service to the nation through boiler manufacturing,” which in present-day
language means “contribution to society by supplying goods and services that we yield.” This spirit can also be
applied to the concept of Corporate Social Responsibility (CSR) that in recent years has become a vital issue forcorporate management. The management principles of the Takuma group companies are all based on the said
founding spirit.

Accommodating customersʼ diversifying
needs through new initiatives such as
the O&M* business

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 to develop
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 the provisions of
the Paris Agreement adopted at COP21, the Group is helping
resolve social issues with technologies for reducing
emissions of greenhouse gases like carbon dioxide throughsuch means as high-efficiency generation of electricity using
waste and biomass.

July 2019
President and CEO
Takuma Co., Ltd.

7

* United Nations Global Compact:

It was the Company Motto of Takuma, then Takuma Boiler

The Takuma Group has joined the United Nations

Manufacturing Co., Ltd., founded by Mr. Tsunekichi Takuma,

Global Compact (UNGC), which is a voluntary effort

one of the ten great inventors of Japan during the Meiji andto create a global framework for implementing

Taisho periods (1868-1926).

sustainable growth by having companies and groups* O&M: Operation & Maintenance

TAKUMA 2019 ANNUAL REPORT

Harmony with society

Practice of customer satisfaction

Practice of compliance with laws and ordinances as well
as sound economic activities

Making appropriate disclosure of information

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

Hiroaki Nanjo* Service to the nation through boiler manufacturing:

1. 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 and regulations
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 the social order andsecurity 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 high acclaim andconfidence from our customers.
6. We shall strive to disclose corporate information to shareholders and investors through investor relations (IR) and otheractivities 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.

exercise responsible and creative leadership while
acting as good members of society.

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

Respect for basic human rights

Message from Top Management

Currently, Takumaʼs principal businesses include the Solid
Waste Treatment Plant Business; the Energy Plant Business,
which includes our Package Boiler Business; and the Water
Treatment Plant Business. These three core areas ofoperations have grown thanks to continuous effort overmany years, and by cultivating trusting relationships withcustomers, they have earned us excellent market share. We
are now embarking on a new initiative that will seek todevelop an O&M business for energy plants, an area thatshares our focus on maintenance, into a robust contributor
to Takumaʼs bottom line by taking advantage of theexperience weʼve gained in solid waste treatment plants.
Continuous action will be needed in the future in order toaccommodate customersʼ diversifying needs so that we cancontinue to grow. Through the creative efforts of all
employees, we will show the way forward for each businessso that we can achieve the goals of the 12th Medium-Term
Management Plan and realize our medium- and long-term
vision for the next stage in our history.

Helping solve social issues fromthe worldʼs standard perspective

Takuma and the Takuma Group companies believe that it is essential for the sound development of the groupthat 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.

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

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

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

9. Prohibition of discriminatory actions
10. Respect for individuality, personal quality, andprivacy
11. Safe work environment

TAKUMA 2019 ANNUAL REPORT

8

Takuma Group 12th Medium-Term Management Plan - An Overview (FY 2018 to 2020)

1.Positioning of the 12th Medium-Term Management Plan
●
●

500

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.

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 thebusiness environment undergoes major changes.)
12th Medium-Term Management Plan
(FY2018 to FY2020)
11th Medium-Term Management Plan
(FY2015 to FY2017)

Strengthening of corporate capability
to facilitate steady growth

10 Medium-Term Management Plan
(FY2012 to FY2014)

Steady expansion in terms of bothquantity and quality

Cumulative ordinary profit target

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

Reinforcement of business foundation
for stability and proﬁtability

Cumulative ordinary profit results

Proﬁtability through selection andconcentration of resources

Cumulative ordinary profit resultsth

JPY 25.7 billion

Many of the Groupʼs products are used for a long period oftime, for example for 20 or 30 years from the time of delivery.
Offering high-quality after-sales service in an ongoing mannerso that customers can use those products more effectively andover a longer period of time contributes to both customersʼ andthe 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 meetcustomersʼ diversifying needs in an individualized manner.

❷Achieving 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.

❸Increasing productivity, for example byreforming business processes

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

TAKUMA 2019 ANNUAL REPORT

aging of Japanʼs population and the emergence of moreadvanced and diverse 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 businessprocesses that have become increasingly complex in order toaccommodate these changes while focusing on businesses withhigher added value (which will help us create and provide value).

❺Continuing 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
and integrity remains unshakable. In addition, we will work tofurther spread and improve compliance awareness throughout
the Group by effectively implementing and utilizing mechanisms
such as our internal reporting system and CSR awareness survey.

40

The 12 Medium-Term Management Plan, which represents the300
final stage of our current medium- and long-term vision, establishes
the above targets to guide our achievement of the visionʼs goal of200
consistently earning ordinary profit of JPY 10 billion while
simultaneously directing the company to utilize
Order value (left scale)100
all its resources to build a robust business andSales (left scale)management foundation in response to future
Ordinary profit (right scale) 0changes in the business environment.

30
20
10

10th Plan

11th Plan

0

12th Plan(Billion JPY)

10 Medium-Term
Management Plan results

11 Medium-Term
Management Plan resultsth

12 Medium-Term
Management Planthth

2012 to 2014

2015

2016

2017

Total

2018

FY2018 to FY2020

Order value

371.0

99.9

191.0

177.1

468.0

179.8

Sales

296.5

113.0

116.3

118.1

347.5

121.9

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

Ordinary profit

25.7

9.6

11.6

10.6

31.9

12.3

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

4.Core Business Units and Emphasis of Future Activities
As facilities age, there is ongoing robust demand for renewal andservice life elongation.
● Volume is growing for DBO projects as well as O&M services forexisting facilities.

●●●❹Using human resources effectively

We will work to hire and train the diverse workforce that willbe essential as we develop the Groupʼs businesses going
forward. At the same time, we will strive to create anenvironment that keeps individual employees engaged in theirwork and able to make full use of their skills and abilities (bycultivating a healthy workplace culture, reforming individual
awareness, and facilitating fulfilling workstyles).

50

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

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.

●

●

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

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

●●●

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

●

●

●

●
●

There is a growing need for proper waste management andenergy utilization against a backdrop of growing urbanization,
increase of waste volume, and diversification of waste
characteristics.
Build structures to facilitate collaboration with partner companies.
Build schemes for entering new markets.

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

●

●

●

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

2.Policies of the 12 Medium-Term Management Plan
❶Strengthening and expanding our revenue
foundation

400

JPY 33.0 billion

JPY 31.9 billion(Billion JPY)

thConsistently secure annual
ordinary profit of at least
JPY 10 billion.

th

9

3.Financial Target

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

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.

●●●

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

* DBO: Design Build Operate / PPP: Public Private Partnership / PFI: Private Finance Initiative / FIT: Feed-in Tariff

TAKUMA 2019 ANNUAL REPORT

10

Takuma Group 12th Medium-Term Management Plan - An Overview (FY 2018 to 2020)

5.Progress in Implementing the 12th Medium-Term Management Plan
In this section, members of Takumaʼs management team present progress in implementing the goals of
the 12th Medium-Term Management Plan, which began in FY2018.

Kengo Numata

Director & Executive Vice President
Executive Manager, Corporate Planning & Administration Division

The central theme of this Medium-Term Management Plan isstrengthening our corporate capability to facilitate steady growth.
During FY2018, we worked to do just that in an effort to not only
boost profitability, but also better earn the trust of a wide range ofcustomers and other stakeholders, including by offeringhigh-quality solutions that help resolve a variety of todayʼs social
issues. I think it was a good start for the first year of the Plan.
In FY2019 and beyond, we will continue to help build asustainable society by strengthening our corporate capabilities
through operations including our environmental plant, energy
plant, and other businesses and by maintaining our role of being
an indispensable presence in society as a leading company in theﬁeld of renewable energy utilization and environmental protection.

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, 2019)
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): 852 (as of March 31, 2019)
Number of employees (consolidated):
3,619 (as of March 31, 2019)

Permits and registrations●

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
26-10202)
First-class architect office registration (01A02903)
ISO 9001 quality management system certification●

Harima Factory
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)

Hideki Takeguchi

11

TAKUMA 2019 ANNUAL REPORTISO 14001

JQA-EM0313
ISO 14001
certification
Harima Factory

Manufacture of refrigerators (Governor of Hyogo Prefecture)

Tsuyohito Nishiyama

Director & Senior Managing Executive Officer
Executive Manager, Corporate Marketing Group

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

Director & Senior Managing Executive Officer
Executive Manager, Engineering GroupISO 9001

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

The Japanese Solid Waste Treatment Plant and Boiler Plant
Businesses performed well during the first year of the Plan. Orders,sales, and operating income all exceeded the initial planned values as
we enjoyed a smooth start in terms of quantitative performance.
Looking at the business environment, the transition in theJapanese market from manufacturing alone to a service business thatuses products as tools is accelerating, and there is demand in theoverseas market for products and services that can accommodate
individual countriesʼ different situations and needs.
In order to achieve steady growth, it is necessary for companies tobolster their capabilities to ensure they can adapt to changes in thetenor of the times. One of the key themes for this plan is strengthening
and expanding the Japanese plant operation business and bringing new
creativity to its development overseas. Our goal is to enhance ouradaptability and create a foundation that will enable us to secure stableprofits in the future by actively developing more appropriate structures
based on revamped resource allocation, accumulating more skills, andoffering a selection of products that meet the needs of the times.

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

In order to build a society in which the global environment andnatural environment are protected and conserved in an appropriatemanner into the future, it will be necessary to utilize waste effectively
as a resource and to expand production of renewable energy.
Our mission is to maintain our role of being an indispensable
presence in society as a leading company in the ﬁeld of renewableenergy utilization and environmental protection. In keeping withthat mission, our Engineering Group will continue to help build asustainable society by providing plants that make significant inroadsin the drive to protect the environment, develop a recycling-basedsociety, and reduce CO2 emissions through pioneering solid waste
treatment that helps reduce environmental impacts, Energy from
Waste projects that generate power from municipal waste andsewage sludge, and carbon-neutral biomass power generation.

Board of Directors

President

Audit & Supervisory Committee
Audit & Supervisory Committeeʼs Ofﬁce

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

Head Ofﬁce

International Operations Div.
Engineering GroupManagement Center
Technology Center
Project Center
Engineering Center
Construction Center
Harima Factory

Harima Factory

TAKUMA 2019 ANNUAL REPORT

12The Takuma Group Network

The History of Takuma(As of June 26, 2019; see Takumaʼs website for details.)
Takumaʼs business offices

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)Group companies in Japan

1912

Overseas group companies

Group companies in Japan

12 Fujisawa High Trust Co., Ltd.

1 Nippon Thermoener Co., Ltd.

13 Iwate-Kenpoku Clean Co., Ltd.

2 Takuma Technos Co., Ltd.

14 Hitachinaka-Tokai High Trust Co., Ltd.

3 Hokkaido Sanitary Maintenance Co., Ltd.

15 Anan High Trust Co., Ltd.

4 Takuma Technos Hokkaido Co., Ltd.

16 Takuma Energy Co., Ltd.

5 Sun Plant Co., Ltd.

17 Kurume High Trust Co., Ltd.

6 Takuma Engineering Co., Ltd.

18 Hokutan High Trust Co., Ltd.

7 Takuma System Control Co., Ltd.

19 Suwako High Trust Co., Ltd.

8 Dan-Takuma Technologies Inc.

20 Imabari High Trust Co., Ltd.

1912

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

1920
Tsunekichi Takuma

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.

21 Energy Mate Co., Ltd.

10 Kankyo Sol-Tech Co., Ltd.

23 Kashihara High Trust Co., Ltd.

11 Takuma Plant Service Co., Ltd.

24 Tochigi High Trust Co., Ltd.

12 Nagaizumi High Trust Co., Ltd.

25 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

24

2
8

4 3 4

12

5

15

1

13

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

Japanʼs ﬁrst waste incineration plant1963 delivered
Sewerage treatment facility delivered

The Takuma Group Network/The History of Takuma

9Japanʼs ﬁrst waste incineration plant

1970
14
8

25

7

19

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

5

9 10

3

6

1 6 7 11 17

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

2

22

23

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

1992

The ﬁrst delivery of a waste energy treatment facility
completed in Taiwan(Nei-Hu, Taipei City)

1995 Amagasaki Head Ofﬁce Building completed
Japanʼs largest Energy from
Waste plant delivered
1998(Tokyo Shinkoto Waste Treatment
Plant capacity: 1,800 tons per day)1997 ISO9001 certiﬁcation obtained

16

Overseas group companies
1 Taiden Environtech Co., Ltd.

1999 ISO14001 certiﬁcation obtained for Harima Factory

The ﬁrst delivery of a waste energy
2005 treatment facility completed
in China(Tianjin City)

2010

2013

2010

Energy from Waste plantdelivered in 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。
Energy from Waste 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

1986

1990

21

10 1

Vacotin Heater

1980

20

18

1972 Company renamed Takuma Co., Ltd.

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 2019 ANNUAL REPORTTAKUMA 2019 ANNUAL REPORT

14

Introduction to Takumaʼs Businesses

1.Environmental Plant Business■ Receiving the Japan Resilience Award (Resilience Grand Prize) 2019 Grand Prix
The Imabari City Waste Management Center, which received the Japan Resilience Award(Resilience Grand Prize) 2019, incinerates solid waste from about 160,000 residents of the city of
Imabari and uses the resulting thermal energy to generate electricity. The plant is the first solid
waste treatment facility in Japan to adopt the “Phase Free” concept, allowing it to function as a place
where residents can gather and enjoy interaction with other members of the community during
times of normal operation and as a designated evacuation center where residents can seek refuge intimes of disaster. The facility has incorporated procedures such as disaster prevention training andevacuation center operation into its operation in order to ensure it can serve as a space whereresidents can evacuate with peace of mind in the immediate aftermath of a disaster.
The plant received the Grand Prix in recognition of these advanced and extensive disasterprevention initiatives.
* Japan Resilience Awards
The Japan Resilience Awards recognize advanced companies and organizations that have undertaken activities,
technology or product development programs, or other initiatives to help make their country, region, people, orindustry more resilient in an effort to build a next-generation society that is resistant to the effects of disasters.

At the award ceremony

Imabari City Waste Management Center
Phase Free initiative

Normal operation

Strengthening our value chain and＋supplying facilities that create new value

Solid waste
treatment

Officer
Hidetoshi Tomita Executive
Executive Manager, Environmental Plant Division

Always (normal operation)

Waste treatment ● Environment awareness-raising activities● Events ● Supply of power to the community ● Resident activities● Communication of facility information●

Since constructing Japanʼs first fully continuous mechanicalEnergy from Waste plant in 1963, Takuma has delivered Energy
from Waste plants for more than half a century as a leading
company in its industry. To date, weʼve delivered more than360 plants in Japan, including Energy from Waste plants withsome of the largest processing capacities in Japan (at 1,800
tons per day) and methane gasification facilities.
During FY2018, we received two orders for new municipal solid
waste treatment plants, one for the Osaka City・Yao City・
Matsubara City Environment Facilities Association (located in
Osaka Prefecture), and one for the Ariake Living Environment
Facilities Association (located in Fukuoka Prefecture). We also
received a total of four orders for primary equipment
improvement work and equipment renovation work for customers
including the Oshima District Cooperative of Municipal Solid
Waste Management (located in Hokkaido Prefecture) and the Cityof Hitachiota (located in Ibaraki Prefecture). We also received
orders for overhaul work, regular adjustment, and maintenanceinspections from local governments, and weʼre working hard tomaintain plant performance and stable operation.

Weʼre seeing steady growth in orders forfiltration systems.
Takuma also has more than 50 years of experience in water
treatment, another key aspect of the Environmental Plant

15

TAKUMA 2019 ANNUAL REPORTBusiness. Our products excel particularly in advanced wastewater
treatment technologies, and weʼve delivered numerous upflow
moving-bed filtration systems (Uniflow Sand Filter).
During FY2018, we received orders for sand filtration systems
and other products, and order volume is generally in line with
our goals for the first year of the current Medium-Term
Management Plan.

Weʼre helping build a sustainable society.
Noteworthy accomplishments during FY2018 included
receipt of the Grand Prix, the most prestigious award at the
Association for Resilience Japanʼs Japan Resilience Award(Resilience Grand Prize) 2019, together with Imabari City
(Ehime Prefecture), NPO Imabari Center, and Imabari High
Trust Co., Ltd. The accolade recognized advanced and extensive
disaster prevention initiatives carried out by the four partners
at the Imabari City Waste Management Center, a facility that
we delivered in FY2017.
In this way, we will continue to supply safe facilities thatinspire peace of mind and comfort on the part of local
residents, enhance operations and service, and strengthen ourvalue chain in areas such as plant maintenance and operation.
The United Nations Sustainable Development Goals wereadopted in 2015, and the Paris Agreement came into force in2016. Going forward, Takuma will work to help build asustainable society by striving to reduce its environmental
impacts.

The facilityʼs gym is used for resident activities.

The facility supports events by local NPOs.

In times of emergency (natural disasters)

Continuation of waste treatment ● Disaster waste treatment● Evacuation center ● Supply of power to evacuation centers● Provision of space for evacuees ● Communication of disaster information●

The gym can be used as an evacuation center.

Introduction to Takumaʼs Businesses

We receive orders for a broad range ofservices, from construction to maintenance.

Powergeneration

The facility supports evacuation center
operation by local NPOs.

Equipment-focused initiatives (Resilient facilities and equipment) Organizational initiatives (Personnel support and community development)■ Opening Solution Lab, a next-generation facility that utilizes ICT
Since opening in 2004, Takumaʼs Comprehensive Operation Support Center has provided
remote monitoring and operational support for municipal solid waste treatment facilities. In
2019, we opened the Solution Lab with the goal of further enhancing the Centerʼs functionality
by augmenting the expertise itʼs accumulated to date with use of operational and maintenancemanagement data obtained by means of the latest information and communications
technologies (IoT, “Big Data,” and AI). As a result, it is able to offer optimal, high-quality
operational support services in partnership with group company Takuma Technos.
The Solution Lab will move to the sixth floor of the tentatively named Takuma Building New
Wing (Training Center)*, which is being built at our Head Office campus.
* The Takuma Building New Wing, which is scheduled to be completed in October 2020, is a six-story,
next-generation wood structure built using cross-laminated timber (CLT) and fireproof laminatedwood. The structure was selected as part of the Ministry of Land, Infrastructure, Transport andTourismʼs FY2018 Sustainable Building Leading Program (Leading Wood Structures).

Operation andmaintenance support

Three roles of the Solution Lab
Customer issue resolution
and research

Human resources development
and technology training

TAKUMA 2019 ANNUAL REPORT

16

1.Environmental Plant Business(Related SDGs)

Municipal solid waste treatment plants built recently are required to offer far-reaching performance and functionality, including
increased generating efﬁciency and recycling rates, reduced greenhouse gas emissions, enhanced facility resilience, and longer
service lives.
To meet precisely these demands from society and customers, Takuma delivers safe facilities that inspire peace of mind by taking
maximum advantage of the advanced technologies and expertise that have been fostered by its extensive track record of projects.

■ Plant construction●■ Primary equipment improvements
Municipal solid waste treatment plants must operate for extended periods of time, but their equipment must be updated once 20 or more years
have passed since the start of operation. In addition, changes to applicable laws and social conditions may necessitate large-scale modiﬁcations.
Takuma draws on the sophisticated heat utilization technologies and energy-saving technologies it has accumulated as a boiler andenvironmental plant manufacturer to carry out high-value-added and large-scale renovation projects. In this way, we are able to help extend
facilitiesʼ service life while lowering CO2 emissions.

Example of a primary equipment improvement project

Stoker-type incinerators

Energy from Waste plants must process waste in a safe and stable manner. Takuma stoker-type incinerators, which are one of our
ﬂagship products, excel at safe, stable combustion and generate lower CO2 emissions than other designs that require auxiliary fuel.
By combining a stoker-type incinerator with other technologies such as high-efﬁciency power generation and advanced exhaust gas
treatment, weʼre helping municipalities around Japan solve their solid waste treatment issues.
Steam

A
2

B

Circulation of ﬂy ash

Technology for circulating ﬂy ash collected by a ﬁlter-type dust
collector reduces the amount of ﬂy ash requiring ﬁnal disposal.

Steam turbine
generator

3

BoilerExhaust gas recirculation

Exhaust gas recirculation technology
limits the generation of toxic substances.

Measures to recover energy

Improvement of heat recovery

・Installing boilers on

water-injection furnaces
・Expanding boilersʼ
heating surface

Measures to save energy

Improvement ofsteam turbine capacity

Enhancement of
combustion equipment efﬁciency

Improving generating
capacity by increasing
steam intake capacity andoptimizing design features

Improving stable combustion bychanging furnace shape andstabilizing the volume of steam
generation and power generation

Control changes
Introducing inverters
for speed and airﬂow
control

Raising efﬁciency
Raising the efﬁciency ofelectric machinery andother components

Exhaust gas

Economizer
Incinerator

Catalyzer■ Maintenance

Filter-type
dust collector

1

StokerIncineration of solid waste

・Solid waste introduced into theincinerator burns at a temperature of
850 C or higher as it moves on thestoker (a step grate stoker system).

●

B

2

Stack

3

Use of steam・Heat produced during the incineration process is recovered by theboiler and economizer and used to produce steam, which ﬂows
through a steam turbine generator to generate electricity.
・Steam also serves as a heat source for hot water, heating, cooling, andother uses in the plant and nearby facilities.

Processing of exhaust gas

・Toxic substances in exhaust gas ﬂowing

out of the boiler and economizer are
removed by a ﬁlter-type dust collector
and catalyzer so that they do not remainin smoke generated by the plant.

Combustible waste
Methane gas

Garbage
Wet paper

Methane fermentation tankFermentation
residue
Plastics, etc.

Steam

Electricity
generation
Gas-powered
generator

Maintaining a conveyor

Electricity
generation

Steam turbine generator
Exhaust gas

Incinerator and boiler

Exhaust gas
treatment system

The long-term turnkey operation business, in which customers enter into contracts covering both operation and maintenance management fora term of 10 to 20 years, has become the most common approach in the industry in recent years, for example in the form of DBO projects. The
Takuma Group operates many facilities using this approach.
Weʼve been introducing, a comprehensive operation, maintenance, and management support system that we developed in
FY2016, to these facilities in an effort to improve our operation and maintenance management services. Furthermore, weʼre offering additional
support for operation while helping customers resolve issues by using data collected from facilities we operate by the Solution Lab (see page 26).
We will continue to meet the needs of customers and society by making maximum use of the Takuma Groupʼs technologies and expertise,including maintenance management expertise accumulated by Takuma and operational management expertise accumulated by Group company
Takuma Technos.

Operating data

Electric powercompany

Sorting system

TAKUMA 2019 ANNUAL REPORT

Repairing an incineratorʼs refractory■ Long-term turnkey operation business

Methane recovery plants

Recently the Ministry of the Environment has been encouraging the introduction of methane recovery plants for use with municipal solid
waste. This is an area where Takuma is helping further lower CO2 emissions with a combined system of methane fermentation and incineration
for municipal solid waste to recover the maximum amount of energy from the waste treatment and utilize it in high-efﬁciency power
generation. (The system received the New Energy Foundationʼs Chairman Award at the FY2014 New Energy Awards.)

17

Annual maintenance is essential in order to ensure stable operation ofmunicipal solid waste treatment plants. Maintenance demands bothsophisticated technological capabilities and experience, both because
waste treatment plants draw on a range of expertise and because themanner in which their equipment deteriorates over time varies with theproperties of the waste they process. Takuma takes maximum advantage of
its accumulated expertise to contribute to stable waste treatment andlong-term facility operation by developing long-term repair plans, carryingout elaborate site investigations, and then performing maintenance thathas been optimized in terms of both timing and content.

Introduction to Takumaʼs Businesses

1

A

Stack

Operated
facility
New EnergyAwardsNew Energy
Foundationʼs
Chairman
Award

Inspection data
Maintenance data

Increasing the quality of our operation,
maintenance, and management services
・Implementation of safe and sophisticated operation
・Streamlining of maintenance and management
・Optimization of utility use and powerincome/expenditures

Aggregationof dataUtilization ofsystemfunctionality andprovision oftechnical support

Takuma, Takuma Technos
integrated server
Solution Lab
Central management andaccumulation of a range of data types
・Statistical analysis of data and machine learning
・Evaluation of equipment performance and failure prediction
・Visualization of service level and study of reductions etc.

TAKUMA 2019 ANNUAL REPORT

18

1.Environmental Plant Business(Related SDGs)

Takuma has delivered numerous systems utilizing advanced technologies, particularly for treating wastewater, in an effort 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 andcreate energy from sewage sludge. In an effort to meet these requirements, Takuma has been focused on developing a step grate stoker
furnace sewage sludge power generation system and commercializing technologies that use waste heat from the incineration process togenerate electricity.
Going forward, we will continue to help conserve the aquatic environment by supplying products that meet the needs of our times.

■ Water Treatment Plants●

Incoming
water path

Advanced treatment
facilities

Reaction tank facilities【Principal equipment】

Incoming
water pipe
Catchment
troughPurification air
Filteredwater

Secondary wash

Sand filter

Aeration panel

Crude sludge

Filter layer

Excess sludge●

Aerobic tankAir-lift
pump
Filterbed
surface

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

Air-lift pumpSludge incinerator 【Principal equipment】・Step grate stoker furnace sewage sludge power generation system(step grate stoker furnace and innovative step grate stoker furnace)

Drawn-off sludge

Sludge treatment

Steam generator
Generator

is used to dry dehydrated sludge.

Sludge treatment facility

Sludge incinerator

Boiler watersupply system

19

Exhaust gas

Sludge treatment facility 【Principal equipment】・Rotating drum-type concentrator

A rotating drum-type concentrator consists of adrum-shaped screen consisting of metal wedge wirethat separates and concentrates solid and liquidcomponents from coagulated sludge as the drum
rotates. Following solid-liquid separation, sludge istransported to the exit side of the system as it isconcentrated and pushed by spiral-shaped vanes on theinside of the rotating drum. Thanks to a simple design
whose operation hinges on a slowly rotating drum
screen, the system uses less power than its conventionalcounterparts, yielding high energy savings.

TAKUMA 2019 ANNUAL REPORT

Cleaning nozzle
Drum screen

is used to generate electricity.
Process water

Process steam

Dryer
●

Steam produced by the boiler*

Steam
Dehydrated
sludgeGenerating equipment

Binary generator

Steam from a steam generator

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 use of the energy
contained in sludge by using it as a fuel to generate electricity. Following the systemʼs selection for inclusion in the Ministry of Land,
Infrastructure, Transport and Tourismʼs Breakthrough by Dynamic Approach in Sewage High Technology Project (B-DASH) in FY2013, we havereceived orders for the system from the cities of Tokyo and Sapporo.

Incinerator
Digester tanks

Sand is washed by counter-flowing filteredwater as it falls inside the sand washer.

Filter layer

DisinfectiontankAnoxic Aerobic
tank
tank

Sand is moved toward the top of the filter while
being vigorously stirred inside the air-lift pump.

Sandwasher

Discharge

Anaerobic Anoxic
tank
tank

Primary wash

Treated water

Purified
wastewater

Final settling pond

Initial settling pond

Filter sand washing cycle

Catchment troughSourcewater

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

Pre-processing
equipment

have delivered more than 2,700 units in Japan. A design thatcombines filtration treatment with continuous backwashing of thefiltration sand ensures stable operation and exceptional
maintainability.
The product line includes high-speed models with double or triple
the filtration speed of the standard model as well as denitrifying anddephosphorizing variants that add functionality for eliminating
nitrogen and phosphorus to standard SS elimination functionality.

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 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 of which we

Water treatment plant equipment flow
Sewage intake

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

Incoming
sludgeHeat produced by incinerating sludge

Waste heat boiler

is recovered and used to produce steam.

Dust collector

Process
water (*)

Combustion air

Concentrated
sludgeDehydrated
liquidCombustion air fan
N2O, a gas whose greenhouseeffect is 298 times more
pronounced than that of CO2, isbroken down by high-temperature
combustion at 900 C to 1,100 C.

Step grate stoker furnace

Ash bunker

Flue gas
treatment stack

Dust is removed from
Combustion

Photograph taken
inside the furnace

exhaust gas.

Induction fan

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

TAKUMA 2019 ANNUAL REPORT

20

1.Environmental Plant Business
Main Recent Projects■ Water Treatment Plant BusinessTakasu Sewage Treatment Plant

The following are the main plants supplied by Takuma during FY2018.

Project nameUrado Bay Eastern Basin Takasu Sewage Treatment Plant
Sludge Treatment System Construction Part 12■ Municipal Solid Waste Treatment Plant Business● New construction

Capacity
Type: Pressurized screw press dehydrator
Treatment capacity: 225 kg-DS per hour
Location
Kochi Prefecture

Matsubara Preprocessing Plant
Project name
FY2017 Matsubara Preprocessing Plant Automatic Coarse Dust Eliminator
Renovation Project
Capacity
Type: Intermittent front-surface mixing-type screen
Speciﬁcations: 3,500 (W) 1,100 (D) mm
Project name
FY2018 Matsubara Preprocessing Plant No. 2 Concentration Tank
Sludge Scraper Update Project
Capacity
Type: Sludge scraper (center-drive vertical type)Speciﬁcations: ∅17.9 m 1 unit

Environmental Forest Center, Kizugawa
Capacity
Incineration facility:
94 tons per day (47 tons per 24 hours 2 units)
Power output: 1,220 kW

Location
Kyoto Prefecture

Location
Hyogo Prefecture● Primary equipment improvements

Introduction to Takumaʼs Businesses

Project name
Clean Center Facility
Maintenance Project

Kasai Water Reclamation Center
Project name
Kasai Water Reclamation Center Sludge Concentration Tank No. 1
Machinery and Equipment Improvement Project
Capacity
Type: Sludge scraper (center-drive post type)Speciﬁcations: ∅28 m 1 unit
Location
Tokyo Prefecture

Kumagaya Sanitation Center No. 1 Plant

The Inariyama Environmental Center

Project name
Kumagaya Sanitation Center No. 1 Plant
Primary Equipment Improvement Project

Project namePrimary Equipment Improvement Project,
The Inariyama Environmental Center, Sayama City

Capacity
Incineration facility:
140 tons per day (70 tons per 24 hours 2 units)

Capacity
Incineration facility:
165 tons per day (55 tons per 24 hours
Power output: 264 kW

Location
Saitama Prefecture

21

TAKUMA 2019 ANNUAL REPORT

Location
Saitama Prefecture

3 units)

Iizaka Clean Site
Project nameIizaka Clean Site Phase 2 Final Treatment Plant Seepage Water Treatment
Plant Construction Project (No. 2 Area)
Capacity
Type: Contact oxidation-type nitriﬁcation denitriﬁcation system
Speciﬁcations: 110 m3 per day
Type: Centrifugal dehydrator
Speciﬁcations: 515 kg-DS per hour
Location
Fukushima Prefecture

TAKUMA 2019 ANNUAL REPORT

22

Introduction to Takumaʼs Businesses

2.Energy Plant Business(Related SDGs)

Weʼre helping realize a sustainable society while working to resolve customersʼ issues as well as social problems
through our business activities.

Preserving the environment in the form

Promoting renewable energyWeʼre helping promote renewable energy bysupplying biomass power plants.

Contributing to local communities andthe renewable energy industry
with plants of the highest possible level of qualityof water, air, and mountain forests
Weʼre helping preserve the global environment by
supplying plants that utilize appropriate technologies
and systems to protect the environment.

Making effective use ofunutilized resourcesWeʼre helping realize a recycling-based society bysupplying plants that can efficiently burn fuels and waste
products that have gone underutilized in the past.

Reducing CO2 emissions
Weʼre helping realize a low-carbon society bysupplying high-efficiency power plants.

Mitsuaki Adachi Executive Manager, Energy Plant Division
Managing Executive Officer

Value provided by Takumaʼs Energy Plant Business

Biomass power as a solution forsocial problems

Our Energy Plant Business traces its roots back to thefounding of Takuma in 1938 by Tsunekichi Takuma, whodeveloped Japanʼs first high-performance boiler. Since thattime, weʼve enhanced technologies for using a variety offuels including biomass and solid waste and delivered
numerous boilers to customers (more than 600 in Japan andoverseas; a total of more than 3,220 boilers including units
that burn oil, gas, and wood).
Demand for wood-fueled biomass power plants has been
growing since Japanʼs introduction of a feed-in tariff (FIT)
program for renewable energy in 2012, and we havedelivered such facilities to many customers that havepraised our long-running track record. I am grateful for thisachievement and recognize that it is the result of our
stakeholdersʼ support. We take pride in marshalling all of
our capabilities to fill orders by supplying plants of thehighest possible level of quality.

We recently received our first O&M order for a biomass
power plant that will be delivered to a private-sector
company. Going forward, we will strive to ensure we cancontribute to customersʼ businesses in a comprehensive way
by offering a range of proposals, including for O&M projects.
Under the FIT program, biomass power is treated as asource of power that strives to facilitate medium- andlong-term autonomy while coexisting with local
communities, and it is a business that can contributedirectly to the resolution of social issues in the form of
unused lumber left on mountains and local employment.
Consequently, we look forward to helping facilitate thesustainable development of local communities and of therenewable energy industry by making a broad contribution
to customer businesses based on technologies andcomprehensive capabilities developed over many years,
even as we keep tabs on factors such as discussions of an
expected future review of the FIT program.

TAKUMA 2019 ANNUAL REPORT

１．Plant engineering

２．After-sales service

We supply plants that can burn a variety of fuels
and waste products in a stable manner overextended periods of time based on our extensive
track record 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 overextended periods of time, including unused lumber,lumber waste, construction waste, PKS, pellets,
livestock waste, bagasse, and papermaking 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.

Facilities that incinerate industrial waste to
generate power

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
products in an appropriate manner.

Introduction to Takumaʼs Businesses

23

Meeting growing demand witha sure track record

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

TAKUMA 2019 ANNUAL REPORT

24

2.Energy Plant Business

The following are the main plants supplied by Takuma during FY2018.

■ Energy plants
KOBE BUSSAN CO., LTD.

Daisen Biomass Power Generation Co., Ltd.

Project name
Biomass Power Plant Construction Project

Project name
Biomass Power Plant Construction Project

Capacity
Fuel: Wood fuelSteam conditions (normal operation):
28 tons per hour 5.98 MPaG 425 C
Power output: 6,250 kW

Capacity
Fuel: Wood fuelSteam conditions (normal operation):
28 tons per hour 5.98 MPaG 480 C
Power output: 7,050 kW

Location
Hokkaido Prefecture

Location
Akita Prefecture

Chugoku Mokuzai Co., Ltd., Hyuga factory

Project nameArao No. 2 Biomass Power Plant
New Construction Project

Project name
Chugoku Mokuzai Wood-fueled Boiler (No. 2)
Construction Project

Capacity
Fuel: Wood fuelSteam conditions (normal operation):29.2 tons per hour 6.0 MPaG 425 C
Power output: 6,250 kW

Capacity
Fuel: Wood fuelSteam conditions (normal operation):
24 tons per hour 1.3 MPaG 195 C
LocationMiyazaki Prefecture

Location
Kumamoto Prefecture

Mogami Biomass Power Co., Ltd.

SARA Inc.

Project name
Mogami Wood Biomass Power Plant
Generating System Construction Project

Project name
SARA Power Plant Construction Project

Capacity
Fuel: Wood fuelSteam conditions (normal operation):
28 tons per hour 5.98 MPaG 465 C
Power output: 6,800 kW
Location
Yamagata Prefecture

25

TAKUMA 2019 ANNUAL REPORT

Introduction to Takumaʼs Businesses

Ariake Co., Ltd., No. 2 Power Plant

Capacity
Fuel: Wood fuel, PKS
Steam conditions (normal operation):
50 tons per hour 6.0 MPa 425 C
Power output: 10,000 kW
Location
Okayama Prefecture

TAKUMA 2019 ANNUAL REPORT

26

Introduction to Takumaʼs Businesses

3.Overseas Business(Related SDGs)

Overseas boiler plant business
The sugar business has been booming in Thailand, where Takuma has a local subsidiary. We have supported the industry formany years and have an extensive track record of supplying boilers that burn bagasse (ﬁber remaining after sugarcane is crushed)since our ﬁrst delivery in 1959.
Going forward, we will continue to tap sure technology and ﬁne-grained service based on our experience to date to help realize
the biomass-derived, Earth-friendly supply of power in not only Thailand, but also in Indonesia, Vietnam, and other Southeast
Asian countries.
*For more information on facilities delivered during FY2018, please see Feature 02, “Biomass Power Plant Construction
Project in Thailand,” on page 21.

Overseas waste treatment plant business

Assessing changes in global trends in the overseas market
to ensure we can continue to contribute to
the development of industry in countries worldwide
Takashi Manabe

Managing Executive Officer
Executive Manager, International Division

As emerging nations develop, they experience population growth and urbanization, causing waste-related issues to manifest
themselves. Their environmental regulations and legal systems are also in a state of development, and inadequacies in
information about waste and technologies for treating it mean these countries have high expectations for Energy from Waste
technologies. We pursue sales activities, for example by studying information such as local systems and waste composition, sothat we can meet those expectations by delivering waste treatment plants that satisfy customers.
As one example, during FY2018 we conducted a viability study of a project in the Indian state of Telangana by taking advantage
of a Ministry of the Environment program. The results of the study, which we carried out
along with local governments in Japan as part of a government-industry partnership andwith the cooperation of local stakeholders in India, were reported jointly to the local
government. By making effective use of a cooperative framework that brought together
the Japanese and Indian governments, we were able to build a good relationship with thelocal government while discovering important information about local needs.
Takuma will continue to work to realize solutions to environmental problems bydelivering waste treatment plants.
Waste composition
study in Telangana

Introduction to Takumaʼs Businesses

Main Recent Project (Waste treatment plant)This section introduces one of the main projects that Takuma has delivered to date.

Resolving issues by accommodating
a diversifying array of needs
The International Division is responsible for sales ofboiler plants and waste treatment plants in overseas
markets. We take pride in the fact that promoting thosebusinesses, which reduce greenhouse gases by making
effective use of non-fossil fuels while contributing to theresolution of environmental issues through the appropriate
treatment of waste, will help achieve the Sustainable
Development Goals (SDGs) that Takuma is pursuing.
Weʼve already delivered close to 400 biomass boilers tooverseas customers. Nowhere is the viability of this businessmore apparent than in Thailand, where Takuma has a local
subsidiary and where we have been supporting the sugar
industry as well as other sectors of the economy for over 60
years. In the past, biomass boilers were used to provide heatand power for equipment at industrial plants, but today
their role is diversifying as a recent global trend toward
converting to renewable energy drives expectations thatthey will function as true power plants by taking on some
responsibility for ensuring societyʼs supply of electricity.

27

TAKUMA 2019 ANNUAL REPORT

Weʼve also delivered dozens of waste treatment plants
overseas. In recent years, the appropriate treatment of waste
has become a particularly urgent issue in developing nations.
While environmental awareness, governmental programs,
budgets, and other considerations vary from country tocountry, weʼre making preparations to ensure success in a
careful and steady manner based on these and related
developments, for example by formulating optimal schemes
by which to pursue potential orders and develop projects.

Bringing necessary, valuable products tothe international community
There is no doubt that plants that generate electricity
using Takumaʼs core technologies to burn biomass andwaste are earning recognition as both necessary andvaluable in a society thatʼs working to achieve the SDGs in aconcerted manner. Although the business environment willremain intensely competitive, we will continue to contributeto the international community by developing latentcustomer demand in a ﬁne-grained manner and supplying
solutions that meet those needs.

Lutsao Refuse Incineration Plant
Capacity
Incineration facility:
900 tons per day (450 tons per day
Power output: 28,000 kW

2 units)

Location
Chiayi, Taiwan

Message
Naoya Akasaki
Sales Section 2, International Department
International Division

Waste issue offers challenges to all countries, but speciﬁc needs and conditions vary from country tocountry. In Asia, there has been a trend away from waste disposal, which has centered on landﬁll until
now, and we believe that this constitutes a ﬁeld in which Takumaʼs Energy from Waste technologies
and experience can make a contribution. Continuous, stable operation is key to facilities that treat
waste such as Energy from Waste plants, for example, as one type of local and environmental
infrastructure. To that end, we will continue to work to ensure we can help resolve challenges in thisﬁeld while deepening our understanding and pursuing cooperation with an array of local entities,
companies, and other stakeholders from the “glocal” (think globally, act locally) perspective.

TAKUMA 2019 ANNUAL REPORT28

Corporate Governance●Directors

Basic policy on corporate governanceout appropriately and that officers carry out their operational
responsibilities by means of a process that is clear, rational,
efficient, and legally compliant. For that reason, we believethat understanding the Corporate Governance Code andputting it into practice in an autonomous and systematicmanner are top-priority management issues.

In order to safeguard and steadily increase Takumaʼs
corporate value over the long term, it is essential not only toensure the development of the companyʼs businesses, but also
to clearly define governance in corporate operations̶that is,to ensure that shareholdersʼ oversight of operations is carried●

Board of Directors●

As of June 26, 2019, the Board of Directors was comprised ofsix 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 makedecisions about important issues related to business
management and issues established by law and ordinances, aswell as to oversee the execution of the directorsʼ duties.

Directors

Including the following outside directors:

11 (10 men and 1 woman)

4 (3 men and 1 woman)●

An Audit & Supervisory Committee that consists of five members,of whom four are outside directors, is responsible for accounting
and operational audits. Members of the committee attend
important meetings, including those of the Board of Directors andthe Committee of Executive Officers, and they strive to understandand observe the status of business execution in a timely andappropriate manner. Drawing on their professional background andexperience, they express their opinions as necessary from an
objective perspective, and they conduct strict auditing of thebusiness execution performed by the directors. To facilitate theeffectiveness of audits carried out by the Audit & Supervisory
Committee, the representative director holds regular meetings withcommittee members to ensure good communication.

Executive Officers●

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 whoare entrusted with the responsibility of executing our businessactivities. As of June 26, 2019, there were 15 executive officers(including those who also serve as directors). Moreover, we havealso established a Committee of Executive Officers, which is chairedby the president/chief executive officer, as an organization that
deliberates matters that are brought up at meetings of the Board of
Directors and other important issues related to the execution of ourbusiness activities. This committee communicates and provides
direction about items decided by the Board of Directors and otherimportant items related to the execution of our business activities
appropriately to the divisions that are to execute them.

Audit & Supervisory Committeeʼs Office

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

Human Resources & Remuneration Advisory Committee

To augment the above structures, we have established a Human
Resources & Remuneration 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 the selectionof candidates for director and executive officer positions and in thedetermination of the compensation and other terms so as toenhance the oversight function of the Board of Directors.

Auditing of accounts

Minoru Murata

Osamu Iwahashi

Tomomi Fujita

Hiromichi Satake

Yasushi Enomoto

Outside Director(Audit & Supervisory
Committee Member)

Outside Director(Audit & Supervisory
Committee Member)

Outside Director(Audit & Supervisory
Committee Member)

Outside Director(Audit & Supervisory
Committee Member)

Director(Audit & Supervisory
Committee Member)

Hideki Takeguchi

Kengo Numata

Takaaki Kato

Hiroaki Nanjo

Tsuyohito Nishiyama

Koji Tanaka

Director
Senior Managing
Executive Officer

Director
Executive Vice President

Director
Chairman
Executive Officer

Representative Director
President andChief Executive Officer

Director
Senior Managing
Executive Officer

Director
Executive Officer

Managing Executive Officer

Executive Officer

Takashi Manabe
Ryoji Tani
Norito Uchiyama
Mitsuaki Adachi

Akira Taguchi
Hidetoshi Tomita
Norio Maeda
Kunio Hamada
Keiji Nakamura

TAKUMA 2019 ANNUAL REPORT

Appointment
and removal

ReportingGeneralMeetingof
Shareholders

Reporting andstatement of views

Appointment
and removal

ReportingAppointment
and removal

Accounting
Auditors

Reporting

Cooperation
Assistance

Audit &
Supervisory
Committee

Audit &
Supervisory
Committeeʼs
Ofﬁce

Education, instructions, and reporting
ReportingCompliance & Observing and guidance
CSR Promotion
Division
Reporting

ReportingInternal auditing

Auditing
Cooperation

Human
Resources &Auditing andsupervision
Remuneration
Recommendations
Advisory
Committee
Board ofDirectors

Variouscommittees

AdviceDiscussion and reporting

Corporate Governance

Reporting(Back row, from the left)

29

Audit & Supervisory Committee

ReportingCommittee ofRepresentative Executive Ofﬁcers(Deliberation of
Director
important matters)

Selection, dismissal, and supervisionInternal Audit
Department

Internal auditing

Discussion of and reportingon important matters
Issuance of instructions and Executive
communication of information Ofﬁcers

Divisionsandcenters

Execution of
responsibilities

Appointment
and removal

Corporate governance structure(As of June 26, 2019)

TAKUMA 2019 ANNUAL REPORT30

Corporate Governance

Takuma has adopted a Basic Policy for Establishment of anInternal 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 to changing
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 organization●

Basic approachaccording 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 to reporton and prevent misstatements in our financial reporting, isbased on the Financial Instruments and Exchange Act. This
internal control on financial reporting for the Group has resulted
in reports that indicate this system has been effective.
In this way, we will continue to work in the future to ensure
thorough compliance while carrying out business properly
and efficiently while also deepening risk management.

●

Led by the department in charge of compliance and CSR
promotion (CSR Department), Takuma aims at encouraging
that activity through the Compliance & CSR Promotion
Organization that was installed for the purpose of enabling
compliance and CSR to concretely permeate company-widethrough 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 are appointed
as Compliance and CSR Promoters. The meetings conductedwithin this mechanism include regular meetings anddepartmental meetings.

Departmental meetings

Promotion members convene departmental meetings oncea quarter, with educational training aiming at the permeationof compliance and CSR in each department. After
departmental meetings, promotion members implement
compliance and CSR promotion education in their respective
departments using training materials or in-house educational
materials and report the result to the Secretariat.
●

Committee of Executive Officers

Compliance & CSR Promotion Organization
Secretariat (CSR Department)
Each division and center
Compliance & CSR Promotion Administrator (division or center manager)

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

31

TAKUMA 2019 ANNUAL REPORT[Basic purpose of risk management]
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.

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

Takuma Group
Coordinating Committee forCompliance & CSR Promotion

Board ofDirectors

ReportingPresident
Committee of
Executive Officers

Evaluation

Report oninternal control
evaluation
concerning
financialreporting

Request for decision/
reporting

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

Request for decision/
reporting
Reporting

Reporting

Risk Management
Department
Internal Audit
Department

Planning/
reporting

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

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 thorough compliance and risk
management throughout the Group. During FY2018, we
invited representatives of group companies to participate in
two meetings of the committee.

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

Each department

Risk Management Policy

Takuma Group Coordinating Committee forCompliance & CSR Promotion

Board of Directors
President

We are also building a risk management organization andconstructing a system of risk management and promoting
the strengthening of management for group companies aswell through our Takuma Group Coordinating Committee
for Compliance and CSR Promotion.

[Risk management action guidelines]

Regular meetings

Regular meetings are held once a year. The person in
charge of promotion receives reports on the status ofcompliance and CSR promotion company-wide, as well as on
the status of the implementation of compliance and CSR
promotion education for the past year, etc., and participantsdeliberate on a promotion plan for the current fiscal year.
●

Takuma follows a “Risk Management Policy” that connects
company-wide risks and separately classifies them into
“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
reporting risks” related to other corporate business activities.

Risks
concerning
corporate
activities
Eachdivision

Potential risk
Financialreportingrisks

Evaluation

Evaluation

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

Risk management structure

TAKUMA 2019 ANNUAL REPORT

32

Corporate Governance

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

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

２ ．Strive to respond to customer needs and recover from damage quickly by working closely with suppliers andpartner companies to continue business operations.

Treasury stock:
0.1%

Individuals, others:
8.7%

３．Earn the trust of numerous stakeholders, including employees, their families, shareholders, and nearby residents,and fulfill social needs by continuing business operations.

Corporationsin Japan:
15.5%【Disaster rule system diagram】

Risk Management Policy
Foreignindividuals:
28.3%

Risk Management CodeCrisis Management CodeOverseas Risk Management CodeShareholders Report

Financial institutions
and stock brokerages:
47.4%
Composition of shareholders(as of March 31, 2019)

Disaster Prevention Management CodeFire Prevention Plan

* Based on Fire Service Act
Enforcement Regulations

Earthquake Countermeasure Manual
Storm and Flood Damage Countermeasure Manual
Novel Influenza Countermeasure Manual
Safety Confirmation System Administration Rules

BCP
activation
Business Continuity
Plan (BCP)

1. Total number of authorized shares: 321,840,000
2. Total number of outstanding shares: 83,000,000
3. Total number of shareholders: 4,005 (as of March 31, 2019)
4. Major shareholders (top 10)(as of March 31, 2019)
Shareholder

Stake8,415,000

10.1%Japan Trustee Services Bank, Ltd. (Trust Account)

7,980,000

9.6%

4,022,000

4.8%

Nippon Life Insurance Company

3,593,000

4.3%

THREADNEEDLE INVESTMENT FUNDS ICVC-JAPAN FUND

2,275,000

2.7%Japan Trustee Services Bank, Ltd. (Trust Account 9)

1,771,000

2.1%

TAKUMA CO., LTD. Kyoueikai

1,735,000

2.1%

GOVERNMENT OF NORWAY

1,718,000

2.1%

JP MORGAN CHASE BANK 380055

1,688,000

2.0%

Sumitomo Mitsui Banking Corporation

1,621,000

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

Please refer to our "CSR Report 2019" for more details on our CSR activities.

[Takuma Website > CSR]
https://www.takuma.co.jp/english/csr/index.html
CSR-related Contents:

33

TAKUMA 2019 ANNUAL REPORT●CSR Activity Reports and Future Issues●

Human Rights and Labor Practices●

The Environment●

Fair Business Practices●

Activities Involving Product Quality●

Participation in the Community●

Contribution to Society

Corporate Governance

Number of shares

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

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 12 yen per share, which,combined with the interim dividend, brought the annual dividend to 22 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 growthand expansion of our businesses.

TAKUMA 2019 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 from theperspective of management.
Forward-looking statements in the text reﬂect the judgment of management as of the end of the consolidated ﬁscal year under review.
The Group began applying a series of partial revisions made to the Tax Effect Accounting Standards (Corporate Accounting Standard
No. 28, February 16, 2018) and other related changes at the beginning of the consolidated ﬁscal year under review. Information about theGroupʼs ﬁnancial position includes analysis and comparison with the previous consolidated ﬁscal year based on ﬁgures to which theaccounting standard in question and other changes have been applied retroactively.

(1)Business Performance
Demand for products such as Energy from Waste plants and biomass power plants remained robust during the ﬁscal year underreview as growth in orders for construction and operation of such facilities led to order volume of 179,829 million yen, up 2,712
million yen from the previous year. In addition, smooth progress in the construction of ordered plants led to sales of 121,951 million
yen, an increase of 3,752 million yen. As a result, the backlog rose 57,879 million yen to 330,939 million yen.

Financial Information

As growth in sales was augmented by improved proﬁtability thanks to progress in efforts to cut costs, operating income rose 1,574
million yen to 11,604 million yen, ordinary proﬁt rose 1,664 million yen to 12,334 million yen, and proﬁt attributable to owners ofparent rose 1,007 million yen to 8,854 million yen.
Results by Business Segment(millions of yen)
Change from previous
consolidated ﬁscal year

Consolidated ﬁscal year under review
Segment

OrdersreceivedSales
amountOperatingincomeBacklog

OrdersreceivedSales
amountOperatingincomeDomestic Environment and Energy Business

153,628

93,724

12,405322,292

4,735

3,649

1,917

Overseas Environment and Energy Business

799

3,057

163

525

(3,073)(343)

85

Package Boiler Business

17,476

16,954

904

3,872

(219)

(366)

(110)

Equipment and Systems Business

8,567

8,836

361

4,502

1,426

1,139

133

180,472

122,572

13,835331,192

2,869

4,078

2,026

(642)

(621)

(2,231)

(252)

(156)

(326)

(452)

179,829

121,951

11,604

330,939

2,712

3,752

1,574

Subtotal
Adjustments
Total

The Groupʼs operating segments consist of the following four businesses, of which the ﬂagship Domestic Environment and Energy
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 andEnergy Plant segment accounted for 76% of total net sales before excluding inter-segment sales and 90% of total operating income
before excluding adjustments.)■ Domestic Environment and Energy Business
The Domestic Environment and Energy segmentʼs principal business consists of construction of Energy from Waste plants for local
Financial Information

government, sewage treatment plants, biomass power plants for private-sector companies, and other facilities (as part of the EPC
business) as well as after-sales service for those facilities, including maintenance, operational management, and operation.
Demand in the EPC business tends to ﬂuctuate signiﬁcantly over the medium and long term because it is susceptible to factors suchas government policy, for example in the form of environmental regulations and other laws and subsidies for local government andprivate-sector businesses, as well as trends in public and private-sector investment. By contrast, demand for after-sales businesses
such as maintenance is forecast to remain stable over the 20 to 30 year life cycle following the start of plant operation.
Current robust demand in the EPC business is expected to continue in the near future, with Energy from Waste plants generating
update and service life extension demand due to superannuation, with sewage treatment driving demand for transition toenergy-saving and -creating equipment during updates to sludge incineration plants, and with private industry fueling demand forconstruction of new biomass power plants utilizing feed-in tariff programs for power. Demand is expected to grow in the future in theafter-sales service business due to factors such as increased turnkey outsourcing of Energy from Waste plant management, a trend
toward turnkey outsourcing of sewage projects, and an increase in the number of plants covered by after-sales service agreements
and operational outsourcing needs due to growth in the number of plants delivered by the company to private industry.

35

TAKUMA 2019 ANNUAL REPORTTAKUMA 2019 ANNUAL REPORT

36

Status of Business Activities(2)Financial Position
Total assets at the end of the consolidated ﬁscal year under review increased 4,500 million yen from the end of the previous

During the consolidated ﬁscal year under review, we received two new construction orders, including a DBO contract (construction
and operations) for an Energy from Waste plant; three primary improvement orders; one equipment update order; eight construction
orders for biomass power plants and other projects for private-sector customers; and one O&M order. As a result, order volume rose
4,735 million yen from the previous year to 153,628 million yen. Thanks to steady progress in construction of previously orderedplants, sales rose 3,649 million yen from the previous year to 93,724 million yen as sales growth and increased proﬁtability due tocost-cutting drove operating income up 1,917 million yen to 12,405 million yen.
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 work to strengthen andexpand our revenue base by enhancing the after-sales service business, for example by strengthening the proﬁtability of our Energy
from Waste plant operation business, applying operational expertise horizontally to water treatment and biomass facilities, andstrengthening maintenance structures.

■ Overseas Environment and Energy Business
The Overseas Environment and Energy segmentʼs principal business consists of building and maintaining biomass power plants
and Energy from Waste plants overseas. Overseas bases are located in Thailand and Taiwan, where we have local subsidiaries andfrom which we are expanding our business with a focus on Southeast Asia.
Demand for biomass power plants is expected to continue to grow against the backdrop of the regionʼs rich endowment of biomass
resources, and the market exhibits a high level of potential over the medium and long term; however, the environment will remain
highly competitive due to intense rivalry with Indian and Chinese manufacturers for orders for the bagasse-ﬁred plants that are
Takumaʼs ﬂagship product in the region. In addition, although demand for Energy from Waste facilities is growing due tourbanization, a stable market has not yet developed due to the lack of programs and standards as well as fund shortages being
experienced by governments.
Order volume for the consolidated ﬁscal year under review fell 3,073 million yen to 799 million yen as an intensely competitive
business environment prevented the Group from securing any new plant orders. Although sales fell 343 million yen to 3,057 million
yen, operating income rose 85 million yen to 163 million yen due primarily to cost-cutting in plant construction.
In addition to pursuing initiatives to strengthen our competitiveness and create competitive advantages so that we can capture

consolidated ﬁscal year to 155,988 million yen thanks primarily to an increase of 2,728 million yen in deferred tax assets.
Liabilities fell 1,861 million yen from the end of the previous consolidated ﬁscal year to 72,901 million yen as a decrease of 7,383
million yen in short-term loans payable offset growth of 3,347 million yen in unpaid corporate taxes and 2,761 million in notes andaccounts payable.
Net assets rose 6,361 million yen from the end of the previous consolidated ﬁscal year to 83,087 million yen as an increase of 8,853
million yen in retained earnings due to the posting of proﬁt attributable to owners of parent offset a decrease of 1,570 million yen inretained earnings due to the payments of cash dividends.
As a result, the capital adequacy ratio rose 2.6 points from the end of the previous consolidated ﬁscal year to 53.0%, and net assets
per share rose 76.09 yen from the end of the previous consolidated ﬁscal year to 1,000.34 yen.

(3)Status of Cash Flow
Cash and cash equivalents at the end of the consolidated ﬁscal year under review rose 743 million yen from the previous
consolidated ﬁscal year to 61,027 million yen.

■ Cash Flows from Operating Activities
Net cash provided by operating activities totaled 10,817 million yen (compared to net cash provided by operating activities of
5,140 million yen during the previous consolidated ﬁscal year). Principal factors included income before income taxes of 11,139
million yen and an increase of 1,864 million yen from accounts payable and advance money, which offset a decrease of 2,228 million
yen from accounts receivable and advances received.

■ Cash Flows from Investing Activities
Net cash used in investing activities totaled 1,382 million yen (compared to net cash used in investing activities of 328 million yen
during the previous consolidated ﬁscal year). Principal factors included expenditures of 801 million yen on the purchase ofinvestment securities and of 482 million yen on the purchase of property, plant and equipment.

biomass power plant orders on an ongoing basis, we will work to build structures for capturing orders for Energy from Waste plants.

■ Package Boiler Business
The Package Boiler segmentʼs principal business consists of the manufacture, sale, and maintenance of general-purpose boilers
such as small steam boilers, which are used as heat sources in commercial and manufacturing facilities, and vacuum-type water
heaters.
Although the domestic general-purpose boiler market has already matured, it is expected to yield a certain level of primarily
replacement demand going forward, and demand is expected to grow overseas, primarily in Southeast Asia.
Although the Group continued its efforts to tap update demand and expand maintenance orders during the consolidated ﬁscal
year under review, order volume slipped 219 million yen from the previous year, during which a number of large maintenance orderwere received, to 17,476 million yen as sales edged down 366 million yen to 16,954 million yen. Factors including the decline in sales
and rising materials prices drove operating income down 110 million yen to 904 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■ Cash Flows from Financing Activities
Net cash used in ﬁnancing activities totaled 9,119 million yen (compared to net cash used in ﬁnancing activities of 1,670 million
yen during the previous consolidated ﬁscal year). Principal factors included a net decrease in short-term bank loans payable of 7,030
million yen and payment of 1,570 million yen on cash dividends.
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. Additionally, we have enteredinto commitment line agreements with multiple ﬁnancial institutions to supplement liquidity.

(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:

Production output (millions of yen)

air-conditioning equipment and water and sewage equipment as well as the manufacture, sale, and maintenance of equipment like

Domestic Environment and Energy Business

63,0210.7

clean devices and cleaning systems for the semiconductor industry.

Overseas Environment and Energy Business

2,005(27.4)

Package Boiler Business

11,166(1.5)

Construction demand remained strong in the run-up to the Olympic Games Tokyo 2020 and the Paralympic Games Tokyo 2020,
and the semiconductor manufacturing equipment market continued to expand. Based on the outlook for construction demand andthe electronic device market, we expect strong demand to continue in the immediate future.
Order volume during the consolidated ﬁscal year under review rose 1,426 million yen from the previous year to 8,567 million yen
thanks primarily to growth in the construction equipment business, while sales rose 1,139 million yen to 8,836 million yen, andoperating income rose 133 million yen to 361 million yen.
Going forward, we will continue to work to secure stable proﬁts by working steadily to capture robust demand.
Last April, the Group launched its 12th Medium-Term Business Plan, which covers FY2018 to FY2020 and sets forth cumulative
consolidated ordinary proﬁt of 33 billion yen over the three-year period covered by the plan as a numerical target. Ordinary proﬁt ofEquipment and Systems Business
SubtotalInter-segment transactions
Total

Year-on-year (%)

7,406

16.0

83,599

0.7

(592)

134.4

83,007

0.2

Financial Information

Segment

The Equipment and Systems segmentʼs principal business consists of the design and installation of building equipment such as

Notes:
1. Amounts are expressed as total manufacturing expenses.
2. Amounts do not include consumption tax or other taxes.

12.3 billion yen and order volume of 330.9 billion yen during the consolidated ﬁscal year under review, which is the Planʼs ﬁrst year,
indicate that we are making generally smooth progress toward achieving that target.
Going forward, we will continue to work diligently to achieve the Planʼs target.

37

TAKUMA 2019 ANNUAL REPORTTAKUMA 2019 ANNUAL REPORT

38

Status of Business Activities

3. Research and Development Activities
Having identiﬁed the ﬁelds of environmental protection and renewable energy utilization as its principal business domains in an effort② Orders Received

to achieve a sustainable, recycling-oriented society that is not excessively dependent on nuclear power or fossil fuels, the Takuma GroupThe following table summarizes orders received by the Group during the consolidated ﬁscal year under review by business segment:

Segment

Orders received(millions of yen)Domestic Environment and Energy Business

153,6283.2

322,292

22.8

Overseas Environment and Energy Business

799(79.4)

525(81.1)

Package Boiler Business

17,476

(1.2)

3,872

15.6

Equipment and Systems Business

8,567

20.0

4,502

(5.6)

180,472

1.6

331,192

21.2

(642)

32.2

(252)

9.0

179,829

1.5

330,939

21.2

SubtotalInter-segment transactions
Total

Year-on-year(%)

Backlog(millions of yen)

Year-on-year(%)

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

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

Segment

Sales amount (millions of yen)Domestic Environment and Energy Business

93,724

4.1

Overseas Environment and Energy Business

3,057(10.1)

Package Boiler Business

16,954(2.1)

Equipment and Systems Business

8,836

14.8

122,572

3.4

(621)

110.4

121,950

3.2

SubtotalInter-segment transactions
Total

collaboration between the Takuma Group companies and joint research with outside research institutions, universities, and private-sector
companies.
Expenditures on research and development during the consolidated ﬁscal year under review totaled 960 million yen. Principal researchand development activities by business segment were as follows:(1)Environment and Energy Business① In the area of waste treatment, we continue to utilize a demonstration incinerator with a next-generation 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 ofdeveloping proprietary technology to aid in reducing life cycle cost and boosting energy recovery. In addition, we continue topursue 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 toContract target

Takuma Co., Ltd.

Continuous bed ﬁltration of liquids

Takuma Co., Ltd.

Process for the organic and anaerobic
treatment of waste

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.
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. For sewage sludge incinerationand power generation, we continue to develop combustion and generation technology to allow stable incineration of sludge withvarying water content. 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 845 million yen.

(2)Package Boiler BusinessWe developed and launched the Super EQOS EQi(H)-6001KM/AM oil-ﬁred steam boiler as a high-end model in the Super EQOS

Contract date

Name of other party

Contract term

April 1979

Nordic Water Products AB (Sweden)

Until December 2038 (See Note 2.)

December 2011

Hitachi Zosen Inova AG(Switzerland)

For 10 years, then automaticallyrenewed every year

Notes:
1. 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
was entered into.
2. The contract was renewed, extending its term to December 2038.

Contract date

Name of other party

Contract term
For 15 years, then automaticallyrenewed every year

Takuma Co., Ltd. N-type palm wastes ﬁred water-tube boiler

September 1982

P.T. Super Andalas Steel(Indonesia)

Takuma Co., Ltd. Auxiliary agent for ﬁlter-type dust collector

July 1993

MITSUI MINING & SMELTING CO., LTD. For 10 years, then automatically(Japan)renewed every year

November 2005

Nihon Spindle Manufacturing Co., Ltd.
(Japan)Dust elimination technology in exhaust gas
treatment systems using impulse waves

For 10 years, then automaticallyrenewed every year

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.

TAKUMA 2019 ANNUAL REPORT

series of high-efﬁciency, multifunctional boilers. The product uses an oil burner that can control output as desired down to a lower
minimum level than previous models to reduce the number of combustion starts and stops, improve operating efﬁciency duringlow-load operation, and control combustion in response to the load for more efﬁcient operation.
We also developed the Super EQOS EQO-2000KMR/AMR oil-ﬁred, EQS-402/502NS/NM/LS/LM gas-ﬁred, and
EQS-402/502KS/KM/AS/AM oil-ﬁred steam boilers as well as the GSAN-201 to -301 gas-ﬁred and KSAN-201 to -301 oil-ﬁred
vacuum-type water heaters. These products use burners that can control output through multiple stages to boost efﬁciency throughsuch means as reducing the number of combustion starts and stops and improving operating efﬁciency during low-load operation.
They were launched in April 2019.
The research and development budget for this segment of our business was 43 million yen.

Financial Information(2)Technology Out-licensing Contracts
Contract target

facilities previously managed and evaluated independently. In FY2019, we created Solution Lab to further expand POCSYSʼs② In the area of energy, we continue to develop constituent technologies for burning a variety of biomass fuels including unutilized(1)Technology In-licensing Contracts
Contractee

comprehensive support system for operation, maintenance, and management that enables integrated use of a range of data that

operation that inspires peace of mind.

2. Contracts of Major Importance in the Groupʼs Business

39

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 throughfunctionality and service, and we will strive to utilize AI and IoT going forward to contribute to safer, more efﬁcient facility

Year-on-year (%)

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

Takuma Co., Ltd.

vision it has set forth of being an indispensable presence in society as a leading company.

stabilize combustion and to develop technologies for remote monitoring using AI and IoT, for example by utilizing POCSYS, a③ Sales

Contractee

is focusing its management resources on business in these domains as it pursues research and development in keeping with the corporate(3)Equipment and Systems BusinessIn washing systems for semiconductor plants, we launched a joint research project with a university to develop products thatutilize 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 conduct detailed analysis andevaluation.
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 72 million yen.

TAKUMA 2019 ANNUAL REPORT

40

Financial Statement
Consolidated Balance Sheets
TAKUMA CO., LTD. and Consolidated Subsidiaries
As of March 31, 2019 and 2018
Thousands of
U.S. dollars(Note 1)Millions of yen
ASSETS

2019

2019

2018

¥

61,769¥60,864$

556,52949,04650,049441,899

764

380

6,884

2019

2019

2018

Other

281

381

2,526

Less allowance for doubtful accounts

(28)

(38)

(252)

¥

645

¥

7,675

$

5,811

117

470

1,052

37,587

34,913

338,651

Notes and accounts payable (Note 6):
Trade

Unconsolidated subsidiaries
and afﬁliated companies

Short-term loans payable (Notes 6 and 9)
Current portion of long-term debt (Notes 6 and 9)

Notes and accounts receivable (Note 6):
Trade

Millions of yen
LIABILITIES AND NET ASSETS
Current liabilities:

Current assets:
Cash and time deposits (Notes 4, 6 and 8)

Thousands of
U.S. dollars(Note 1)

Unconsolidated subsidiaries
and afﬁliated companies
Other

334

234

3,006

1,227

979

11,057

Total

50,06350,772451,057

Total

39,14836,126

352,714

Inventories (Note 5)

4,356

4,307

39,246

Accrued income taxes

3,628

281

32,690

Other

1,732

1,372

15,606

Advances received

9,798

13,592

88,276

117,920

117,315

1,062,438

Total current assets

Allowance for guarantees on completed work
Allowance for losses on sales contracts

Property, plant and equipment:

Provision for loss on liquidation of subsidiaries and associates

Land (Note 8)

3,013

3,011

27,145

Buildings and structures (Note 8)

11,905

12,287

107,267

Machinery, equipment, lease assets and construction in progress

8,969

10,65380,805(Note 8)Less accumulated depreciation
Total property, plant and equipment

23,88725,951

215,217(15,593)(17,450)(140,491)

8,294

8,501

74,726

Other
Total current liabilities

Investment securities (Notes 6, 7 and 8)

Long-term debt (Notes 6 and 9)
Allowance for directorsʼ and executive ofﬁcersʼ retirement beneﬁts

16,885

136,387

Investments in:

64,312560,825

342

459

3,083

185

183

1,664

9,746

9,406

87,808403

3,448
96,003

Total liabilities

72,901

74,763656,828

13,367

13,367

120,438

5,015

37,506

1,823

49,201

Net assets (Note 12):

Less allowance for doubtful accounts

(109)

(471)

(986)

Common stock

9,514

6,367

85,721

4,810

2,081

43,335

313

340

2,824

29,77525,673

268,267

Total investments and other assets

62,246

10,451

5,460

Other

9,001
54,265

382

4,163

Total

5,709

10,655

Other

Deferred tax assets (Note 15)

999
6,023

Contingent liabilities (Note 11)

Unconsolidated subsidiaries
and afﬁliated companies

1,344
15,672

Total long-term liabilities

Other
15,13886373

Long-term liabilities:

Net deﬁned beneﬁt liability (Note 10)
Investments and other assets:

149
1,739

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

3,768

3,768

33,951Retained earnings

60,86652,949548,390

(235)

(235)

(2,122)

Total shareholders' equity

77,766

69,849700,657

Unrealized gains on securities

5,390

7,161

48,558

8

(46)

75

(4)

2

(37)

Treasury stock, at cost
331,644 shares in 2019 and
331,385 shares in 2018
¥ 155,989¥ 151,489$ 1,405,431

Deferred gains and losses on hedges
Foreign currency translation adjustments

(463)

(559)

(4,170)Total accumulated other comprehensive income

4,931

6,558

44,426

Non-controlling interests in consolidated subsidiaries

391

319

3,520

83,08876,726

748,603¥ 155,989¥ 151,489$ 1,405,431

Remeasurements of deﬁned beneﬁt plans

Total net assets
Total liabilities and net assets

Financial Information

Total assets

See accompanying notes.

41

TAKUMA 2019 ANNUAL REPORTTAKUMA 2019 ANNUAL REPORT

42

Financial Statement
Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income

TAKUMA CO., LTD. and Consolidated Subsidiaries

TAKUMA CO., LTD. and Consolidated Subsidiaries

For the years ended Marcｈ 31, 2019 and 2018

For the years ended March 31, 2019 and 2018
Thousands of
U.S. dollars(Note 1)Millions of yen

Millions of yen

2019

2018

2019

¥ 121,951¥ 118,199$ 1,098,753

94,491

93,372

851,340

27,46024,827

247,413

Unrealized gains (losses) on securities

15,856

14,797

142,862

Deferred gains and losses on hedges

11,604

10,030104,551

Foreign currency translation adjustments

Interest and dividend income

419

367

3,776

Interest expense

(59)

(66)

(535)

Foreign currency exchange loss

(57)

(157)

(509)

Gain on sales of investment securities (Note 7)

-

111

-

Owners of the parent

Gain on liquidation of subsidiaries and associates

-

90

-

Non-controlling interests

Net sales (Note 17)
Cost of sales (Notes 10, 13, 14 and 17)
Gross proﬁt
Selling, general and administrative expenses (Notes 10, 14 and 17)
Operating income (Note 17)

2019

Other income (expenses):

Proﬁt

¥

(999)

-

(9,001)

Loss on valuation of investment securities

(155)

(60)

(1,396)

Loss on disposal of property, plant and equipment

(58)

(44)

(527)

Provision for doubtful accounts

(49)

-

(446)

Equity in earnings of afﬁliated companies

473

461

4,265

Other, net

21

79

189

(464)

781

(4,184)

Other income (expenses), net
Income before income taxes

10,811

Current

4,179

1,352

37,649Deferred(1,991)

1,581(17,936)

2,188

2,933

19,713

Total income taxes
Proﬁt

8,952

80,654

7,878

Proﬁt attributable to non-controlling interests
in consolidated subsidiaries

98¥

Diluted net income(1,772)

2,275(15,966)

58

(3)

519

(9)

(4)

(77)

7,847

$

79,772

U.S. dollars(Note 1)
¥

94.93

$

0.96

-

-

-

22.00

16.00

0.20

96

31

870

2,299

(14,654)

Comprehensive income（Note 16)

¥

7,325

¥ 10,177$ 66,000¥

7,227¥ 10,125$ 65,114

98

52

886

Comprehensive income attributed to:Consolidated Statements of Changes in Net Assets
TAKUMA CO., LTD. and Consolidated Subsidiaries
For the years ended March 31, 2019 and 2018
Foreigncurrencytranslation
adjustments

Remeasurements ofdeﬁnedbeneﬁt plans

¥

Total
Nonaccumulated
controlling
otherinterests incomprehensive consolidated
incomesubsidiaries

Commonstock

CapitalsurplusRetainedearnings

Treasurystock,
at costTotal
shareholders'equityUnrealized
gains onsecurities¥ 13,367¥ 3,768¥ 52,949¥(235)¥ 69,849¥ 7,1612¥ (559)¥ 6,558319¥ 76,726

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

-

-

-

-

-

-

(1,571)

Proﬁt attributable to owners of parent

-

-

8,854

-

8,854

-

-

-

-

-

-

8,854

Change in scope of consolidation

-

-

657

-

657

-

-

-

-

-

-

657

Change in scope of equity method

-

-

(23)

-

(23)

-

-

-

-

-

-

(23)

Purchase of treasury stock

-

-

-

(0)

(0)

-

-

-

-

-

-

(0)

Other changes during the year, net

-

-

-

-

-

(1,771)

54

(6)

96

(1,627)72(1,555)

Balance at the end of current period¥ 13,367¥ 3,768¥ 60,866¥(235)¥ 77,766¥ 5,390¥ 13,367¥ 3,768¥ 46,258¥(234)¥ 63,159¥ 4,886

Cash dividends (¥14.00 per share)--(1,156)-(1,156)--

Proﬁt attributable to owners of parent

-

-

7,847

-

7,847

-

Purchase of treasury stock

-

-

-

(1)

(1)

Other changes during the year, net

-

-

-

-

Balance at the end of current period¥ 13,367¥ 3,768¥ 52,949¥$ 120,438$ 33,951

Cash dividends ($0.17 per share)-

Proﬁt attributable to owners of parent

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

Deferred
gains and losses
on hedges

Total
net assets

Millions of yen
¥

(46)

8

¥

(4)

¥ (463)¥ 4,931¥391¥ 83,088

(21)

¥

6

¥ (591)¥ 4,280¥288¥ 67,727

-

-

-

-

(1,156)

-

-

-

-

-

7,847

-

-

-

-

-

-

(1)

-

2,275

(25)

(4)

32

2,278

31

2,309

(235)

¥ 69,849¥ 7,1612¥ (559)¥ 6,558¥319¥ 76,726$ 477,057$ (2,119)$ 629,327$ 64,523$ (419)21$ (5,040)$ 59,085$ 2,874$ 691,286-(14,152)-(14,152)

-

-

-

-

-

-

(14,152)--

79,772-

79,772

-

-

-

-

-

-

79,772

Change in scope of consolidation

-

-

5,919

-

5,919

-

-

-

-

-

-

5,919

Change in scope of equity method

-

-

(206)

-

(206)

-

-

-

-

-

-

(206)

Purchase of treasury stock

-

-

-

(3)

(3)

-

-

-

-

-

-

(3)

Other changes during the year, net

-

-

-

-

-

(15,965)

494

(58)

870

(14,659)646(14,013)

Balance at the end of current period$ 120,438$ 33,951$ 548,390$ (2,122)$ 700,657$ 48,55875$ (37)$ (4,170)$ 44,426$ 3,520$ 748,603

For the year ended March 31, 2018
Balance at the beginning of current period

Millions of yen

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

¥

¥

¥

¥

(46)

¥

Financial Information

Cash dividends applicable to the year¥
Yen

¥ 107.10

882

31

8,854

Per share:
Net income$ 80,654(1,627)

Total other comprehensive income

Income taxes (Note 15):

Proﬁt attributable to owners of parent

7,878

¥

Other comprehensive income：

100,367

11,140

2019

2018

8,952

Remeasurements of deﬁned beneﬁt plans

Provision for loss on liquidation of subsidiaries and associates

Thousands of
U.S. dollars(Note 1)Thousands of U.S. dollars(Note 1)$$

See accompanying notes.

43

TAKUMA 2019 ANNUAL REPORTTAKUMA 2019 ANNUAL REPORT

44

Financial Statement
Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

TAKUMA CO., LTD. and Consolidated Subsidiaries

TAKUMA CO., LTD. and Consolidated Subsidiaries

For the years ended March 31, 2019 and 2018

Millions of yen

Thousands of
U.S. dollars(Note 1)

2018

2019

¥ 11,140¥ 10,811$ 100,367

798
40
7
155
(5)
4
1,367
999
470
(419)
59
(473)
(2,229)
3
(27)
1,865
431
(3,192)
10,993
647
(60)
(763)
10,817

790
(111)
(90)
60
20
307
(3,205)
441
(367)
66
(461)
200
(387)
(305)
1,959
(426)
(798)
8,504
456
(66)
(3,753)
5,141

7,187
364
67
1,396
(45)
33
12,315
9,001
4,235(3,776)535(4,265)(20,083)
25(243)
16,801
3,888(28,761)
99,0405,832(541)(6,871)
97,460Cash ﬂows from investing activities:
Net decrease (increase) in time deposits
Purchase of property, plant and equipment
Purchase of intangible ﬁxed assets
Purchase of investment securities
Sale of investment securities
Disbursement for loans receivableCollection of loans receivable
Other
Net cash used in investing activities

(14)
(482)
(51)
(802)
105
112
(250)
(1,382)

4
(343)
(125)
(561)
230
(151)
550
68
(328)

(126)
(4,347)(462)(7,221)944
1,011(2,252)(12,453)

Cash ﬂows from ﬁnancing activities:
Net increase (decrease) in short-term bank loans
Payment of long-term debt
Purchase of treasury stock
Payment of cash dividends
Dividends paid to non-controlling interests
Other
Net cash used in ﬁnancing activities(7,030)(470)(0)(1,571)(28)(21)(9,120)(468)(1)(1,157)(21)(23)(1,670)(63,339)(4,233)(3)(14,152)
(250)
(187)
(82,164)

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 4)

(11)
304
60,283440
61,027

8
3,151
57,132¥ 60,283

(103)
2,740
543,141
3,963$ 549,844¥

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 fair presentation, is notpresented 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, 2019, which was ¥110.99 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 this or 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 25 signiﬁcant subsidiaries (the “Companies”).
Takuma Plant Service Co., Ltd., Imabari High Trust Co., Ltd. and Machida High Trust Co., Ltd., which were unconsolidated subsidiaries,
have been included in the consolidation from the consolidated ﬁscal year ended March 31, 2019 because of their increased signiﬁcance.
Suminoe High Trust Co., Ltd., which was a newly established subsidiary, has been included in the consolidation from the consolidated
ﬁscal year ended March 31, 2019. In addition, Campo Recycle Plaza Co., Ltd. has been excluded from the consolidation because of its
decreased signiﬁcance in the current consolidated ﬁscal year. All signiﬁcant intercompany transactions and unrealized proﬁts among theCompanies have been eliminated in consolidation. Investments in certain signiﬁcant afﬁliates over which the Company and/or its
subsidiaries are able to exert inﬂuence to a material degree with regard to ﬁnancial and operating decision making, other thanconsolidated subsidiaries, are accounted for by the equity method after the elimination of unrealized intercompany proﬁts.
Investments in the remaining unconsolidated subsidiaries and afﬁliated companies are not accounted for by the equity method becauseof 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 is recognized
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 denominated inforeign 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 are translated 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 andshort-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 are stated at fairmarket value, and unrealized gains and losses on these securities are reported net of applicable income taxes as a separate componentof net assets. Realized gains and losses on the sale of such securities are computed at cost using moving average cost. Available-for-salesecurities with no available fair market value are stated at cost determined by moving average cost.

Financial Information

2019
Cash ﬂows from operating activities:
Income before income taxes
Adjustments to reconcile income before income taxes
to net cash provided by operating activities:
Depreciation
Impairment loss
Loss (gain) on sales of investment securities
Loss (gain) on liquidation of subsidiaries and associates
Loss (gain) on valuation of investment securities
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in allowance for bonuses
Increase (decrease) in allowance for losses on sales contracts
Increase (decrease) in provision for loss on liquidation of subsidiaries and associates
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
Decrease (increase) in inventories
Decrease (increase) in other current assets
Net increase (decrease) in notes and accounts payable and advance money
Increase (decrease) in other current liabilities
Other
SubtotalInterest and dividend received
Interest paid
Income taxes received (paid)
Net cash provided by operating activities

1. Basis of presenting ﬁnancial statements

If the market value of equity securities issued by unconsolidated subsidiaries and afﬁliated companies or available-for-sale securities
declines signiﬁcantly, such securities are stated at fair market value and the difference between fair market value and the carrying
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 andby applying a percentage based on collection experience to the remaining receivables.

See accompanying notes.

45

TAKUMA 2019 ANNUAL REPORTTAKUMA 2019 ANNUAL REPORT

46

Financial Statement(6) Inventories
Merchandise and ﬁnished goods are stated at cost using the moving average method. Work-in-process is stated at cost determined by
the identiﬁed 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 theasset. However, buildings acquired after March 31, 1998 and facilities attached to buildings and structures acquired after March 31,
2016 are depreciated using the straight-line method. The range of useful lives is principally from 3 to 60 years for buildings andstructures and from 2 to 20 years for machinery, equipment and other. Maintenance and repairs, including minor renewals andimprovements, are charged to income 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 orderby a wide 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.
(11) Allowance for directorsʼ and executive ofﬁcersʼ retirement beneﬁts
Directors and executive ofﬁcers are generally entitled to receive retirement beneﬁts based on the Companiesʼ internal rules. The
Companies provide an allowance for directorsʼ and executive ofﬁcersʼ retirement beneﬁts based on the amount that would be
required if all directors and executive ofﬁcers retired at the balance sheet date.
(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.
(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.
(14) Income taxes
The Companies are subject to corporation tax, inhabitants tax and enterprise tax based on taxable income. The Companies recognize
the tax 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.
(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 eachperiod. Diluted net income per share is computed with the assumption that all convertible bonds were converted into common stockat the beginning of each period. Cash dividends per share represent interim dividends declared by the Board of Directors in each year
and year-end dividends approved by the shareholders at the annual meeting held subsequent to the end of the ﬁscal year.

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 2019 presentation.

47

TAKUMA 2019 ANNUAL REPORT●●“Accounting Standard for Revenue Recognition” (Accounting Standards Board of Japan Statement No. 29, March 30, 2018)“Implementation Guidance on Accounting Standard for Revenue Recognition”(Accounting Standards Board of Japan Guidance No. 30, March 30, 2018)(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. Cash and cash equivalents
Amounts of cash and cash equivalents as of March 31, 2019 and 2018 were reconciled with cash and time deposits as follows:

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

Millions of yen
2019
2018
¥
61,76960,864(742)
61,027¥(581)
60,283Thousands of U.S. dollars
2019$556,529$(6,685)549,844

5. Inventories
Inventories were summarized as follows:

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

¥

¥

2019

Millions of yen

816
2,087
1,453
4,356

¥

¥

2018

733
1,887
1,687
4,307

Thousands of U.S. dollars
2019
$
7,355
18,80013,091$
39,246

6．
Financial instruments(1) Status of ﬁnancial instruments(a) Financial instruments policy
Under Group policy, investment in ﬁnancial instruments is 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(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 andmeet certain hedging criteria, the Companies generally defer recognition of gain or loss resulting from a change in the fair value ofthe derivative ﬁnancial instrument until the related loss or gain on the hedged item is recognized.

3. Accounting standards issued but not yet adopted

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 2019 ANNUAL REPORT

48

Financial Statement(2) Fair value of ﬁnancial instruments
Amounts recognized on the consolidated balance sheets, fair values and differences as of March 31, 2019 and 2018, except items forwhich no fair value was obtainable, were as follows:(3) Redemption schedule of monetary assets with contractual maturities and repayment schedule of short-term loans payable andlong-term debt

（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 andthe fair value is nearly equal to the book value.
Millions of yen
Thousands of U.S. dollars
2019
2018
2019
Amounts recognized on the consolidated balance sheets¥
61,769¥60,864$
556,529
Fair value
61,76960,864
556,529
Difference¥¥$-

As of March 31, 2019

Total

¥

102,596¥(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 short period oftime and the fair value is nearly equal to the book value.
Millions of yen
Thousands of U.S. dollars
2019
2018
2019
Amounts recognized on the consolidated balance sheets¥
49,507¥50,355$446,051
Fair value
49,50750,355446,051
Difference¥¥$-

Short-term loans payable

¥

645

¥

（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.
Millions of yen
Thousands of U.S. dollars
2019
2018
2019
Amounts recognized on the consolidated balance sheets¥
14,943¥
16,795$
134,634
Fair value
14,943
16,795
134,634
Difference¥¥$(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 period oftime and the fair value is nearly equal to the book value.
Millions of yen
Thousands of U.S. dollars
2019
2018
2019
Amounts recognized on the consolidated balance sheets¥
37,869¥35,107$341,193
Fair value
37,86935,107341,193
Difference¥¥$(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 and the fairvalue is nearly equal to the book value.
Thousands of U.S. dollars
Millions of yen
2018
2019
2019
Amounts recognized on the consolidated balance sheets
¥
3,628
¥
7,675
$
32,690Fair value
3,628
7,675
32,690Difference¥¥$(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 and thefair value is nearly equal to the book value.
Thousands of U.S. dollars
Millions of yen
2018
2019
2019
Amounts recognized on the consolidated balance sheets
¥
645
¥
7,675
$
5,811
Fair value
645
7,675
5,811
Difference¥¥$-

Amounts recognized on the consolidated balance sheets
Fair value
Difference

¥
¥

2019

Millions of yen
459
462
3

¥
¥

929
934
5

Thousands of U.S. dollars
2019
$
4,135
4,160
$
25

2018
4,333
90

Thousands of U.S. dollars
2019$34,333
1,754

2018

Items for which no fair value was obtainable(Non-listed equity securities)
Amounts recognized on the consolidated balance sheets
Equity securities issued by afﬁliates
Other

49

TAKUMA 2019 ANNUAL REPORT

Millions of yen

¥

2019
3,811
195

¥

Cash and time deposits

1 to 2 years¥

2 to 3 years¥

3 to 4 years¥

4 to 5 years¥

More than 5 years¥

40,827

8,670

10

-

-

-

Notes and accounts receivable
Investment securities-

Long-term debt

-

117

-

8,670

¥

-

¥

80

-

10

¥

-

¥

182

-

-

-

¥

-

¥

-

-

¥

-

¥

-

80

-

-

Total

¥

As of March 31, 2018

Less than 1 year
60,864¥

1 to 2 years¥

2 to 3 years¥

3 to 4 years¥

4 to 5 years¥

More than 5 years¥

47,648

2,177

530

-

-

-

762

¥

80

¥

182

80

¥

¥

-

-

¥

Millions of yen
Cash and time deposits
Notes and accounts receivable
Investment securities

-

-

Total

¥

108,512¥

Short-term loans payable

¥

7,675

¥

Long-term debt

470

Total

¥

As of March 31, 2019

Less than 1 year

Cash and time deposits$

Notes and accounts receivable

556,529¥$

Short-term loans payable$

Long-term debt

$

117

-

$

5,811

$

¥

$

-

¥

80

-

¥

-

¥

182

¥

-

$

-

$

$

-

$

1,641
$

1,641

¥

-

-

¥

-

80

-

¥

More than 5 years

-

-

$

-

-

-

-

-

$

-

$

-

-

$

-

$

-

721
721

$

¥

4 to 5 years
$

-

87

-

-

80

-

$

-

-

182

87

78,121

721¥

Thousands of U.S. dollars
2 to 3 years
3 to 4 years

721
$

-

530

80

-

924,372

6,863¥

78,121

1,052$-

1 to 2 years

-

Total

¥

117

367,843

Investment securities

Total

8,145

-

2,177

$

-

-

-

$

7. Securities(1) Acquisition costs and book values of available-for-sale securities with available fair values as of March 31, 2019 and 2018 were as
follows:
Millions of yen
Acquisition cost
Book value
Difference
As of March 31, 2019
Securities with book values exceeding acquisition costs：
Equity securities
¥
¥
¥
6,417
14,319
7,902
Subtotal
6,417
14,319
7,902
Securities with book values not exceeding acquisition costs：
Equity securities
759
624
(135)
Subtotal
759
624
(135)
Total
¥
¥
¥
7,176
14,943
7,767

As of March 31, 2018
Securities with book values exceeding acquisition costs：
Equity securities
Subtotal
Securities with book values not exceeding acquisition costs：
Equity securities
Subtotal
Total

Acquisition cost

Millions of yen
Book value

¥

¥

¥

5,923
5,923
551
551
6,474

¥

16,324
16,324471
471
16,795

Financial Information(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 a similar
new loan. Short-term ﬁnancing is primarily for operating funds, while long-term debt is for capital investment.

Millions of yen
Less than 1 year
61,769¥Difference¥¥

10,401
10,401(80)(80)
10,321

TAKUMA 2019 ANNUAL REPORT

50

Financial Statement
As of March 31, 2019
Securities with book values exceeding acquisition costs：
Equity securities
Subtotal
Securities with book values not exceeding acquisition costs：
Equity securities
Subtotal
Total

Acquisition cost$

57,81357,8136,839
6,839
64,652$Thousands of U.S. dollars
Book value$$

129,007
129,0075,626
5,626
134,633

10. Employees' retirement beneﬁts

Difference$$

71,194
71,194(1,213)(1,213)69,981(2) Available-for-sale securities sold for the years ended March 31, 2019 and 2018 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.

Total sales amount
Gains

¥

2019

Millions of yen
-

¥

2018

Thousands of U.S. dollars

230
111

$

2019

-

8. Pledged assets(2) Deﬁned beneﬁt plans
Movement in retirement beneﬁt obligations (except plan applied simpliﬁed method) for the years ended March 31, 2019 and 2018 was
as follows:

Balance at April 1, 2018 and 2017
Service cost
Interest cost
Actuarial loss (gain)
Beneﬁts paid
Balance at March 31, 2019 and 2018

¥

¥

¥

2019

¥

Millions of yen
129
24
150
274
86
663

¥

¥

Thousands of U.S. dollars

2018

193
36
450
256
102
1,037

$

$

2019
1,158
218
1,351
2,467
779
5,973

Balance at April 1, 2018 and 2017Retirement beneﬁt costs
Contributions paid by the employer
Beneﬁts paid
Other
Balance at March 31, 2019 and 2018¥¥

Short-term loans payable as of March 31, 2019 and 2018 were as follows:

¥

2019

¥

Millions of yen
645
645

¥
¥

Thousands of U.S. dollars

2018

7,675
7,675

$
$

2019

5,811
5,811

Current portion of long-term debt as of March 31, 2019 and 2018 was as follows:

SecuredUnsecured

¥

2019

¥

Millions of yen
37
80
117

¥

2018

¥

Thousands of U.S. dollars

72
398
470

$
$

2019

331
721
1,052

Long-term debt as of March 31, 2019 and 2018 was as follows:

¥
¥

2019

Millions of yen
342
342

¥
¥

2018

Thousands of U.S. dollars

37
422
459

$
$

2019

3,083
3,083

2019

51

TAKUMA 2019 ANNUAL REPORT

2019
0.6%
2.0%
2.6%

2018
0.6%
1.5%
2.4%

Millions of yen

580
102
(22)
(35)
11
636

Funded retirement beneﬁt obligations
Plan assets¥

Unfunded retirement beneﬁt obligations
Total net deﬁned beneﬁt liability (asset) at March 31, 2019 and 2018
Net deﬁned beneﬁt liability
Total net deﬁned beneﬁt liability (asset) at March 31, 2019 and 2018

¥

2019

¥

$

2019
79,521
5,403
430
(34)
(3,241)
82,079Thousands of U.S. dollars

2018

565
99
(29)
(54)
(1)
580

¥

Millions of yen

589
(414)
175
9,571
9,746
9,746
9,746

$

$

2019
5,226
917
(195)
(317)
98
5,729

¥

Thousands of U.S. dollars

2018

571
(415)
156
9,250
9,406
9,406
9,406

¥

$

$

2019
5,306
(3,726)
1,580
86,22887,80887,80887,808Retirement beneﬁt costs for the years ended March 31, 2019 and 2018 were as follows:

Service cost
Interest cost
Amortization of actuarial differences
Amortization of prior service cost
Retirement beneﬁt costs based on the simpliﬁed method
Total retirement beneﬁt costs for the ﬁscal years ended March 31, 2019 and 2018

¥

2019

¥

Millions of yen
600
48
139
(4)
102
885

¥

Thousands of U.S. dollars

2018

576
46
157
(49)
99
829

¥

$

$

2019
5,403
430
1,254
(35)
918
7,970

Remeasurements of deﬁned beneﬁt plans for the years ended March 31, 2019 and 2018 were as follows:

The annual average interest rate applicable to bank loans at March 31, 2019 and 2018 was as follows:
Short-term loans payable
Current portion of long-term debt
Long-term debt$

Financial Information

SecuredUnsecuredThousands of U.S. dollars

Reconciliation from retirement beneﬁt obligations and plan assets to net deﬁned beneﬁt liability as of March 31, 2019 and 2018 was asfollows:

9. Short-term loans payable and long-term debt

SecuredUnsecured

Millions of yen
2019
2018
8,826
¥
8,446
600
576
48
46
(4)
62
(360)
(304)
9,110
¥
8,826

Movement in net deﬁned beneﬁt liability of plan applied simpliﬁed method for the years ended March 31, 2019 and 2018 was as follows:

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, 2019 and 2018:

Buildings and structures
Machinery and equipment
Investment securities
Cash and time deposits
Time deposits as construction contract guarantees
Total(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 based on the level of wages andsalary at the time of retirement or termination, length of service and certain other factors.

Prior service costs
Actuarial gains and losses
Total ｒemeasurements of deﬁned beneﬁt plans for the ﬁscal years ended
March 31, 2019 and 2018

¥

¥

2019

Millions of yen
(4)
143

¥

2018
(49)
94

139

¥

45

Thousands of U.S. dollars

$

2019
(35)
1,288

$

1,253

TAKUMA 2019 ANNUAL REPORT

52

Financial Statement
14. Research and development expenses

Accumulated remeasurements of deﬁned beneﬁt plans as of March 31, 2019 and 2018 were as follows:

Prior service costs yet to be recognized
Actuarial gains and losses yet to be recognized
Total balance at March 31, 2019 and 2018

¥

2019

Millions of yen

6
(673)
(667)

¥

¥
¥

2018

10
(816)
(806)

Thousands of U.S. dollars
2019
$
52
(6,059)$(6,007)

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, 2019 and 2018 were as follows:

¥

2019

Millions of yen
961

¥

2018

Thousands of U.S. dollars

929

$

2019
8,656

The principal actuarial assumptions at March 31, 2019 and 2018 were as follows:
Discount rate
Expected rate of salary increase

2019
principally 0.64%
principally 6.7%

15. Income taxes

2018
principally 0.64%
principally 6.6%

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% and 30.8% for the years ended March 31, 2019 and 2018, respectively.

(3) Deﬁned contribution plan
The amount of contribution required for the deﬁned contribution plans of the Companies for the years ended March 31, 2019 and2018 was ¥135 million ($1,213 thousand) and ¥132 million, respectively.

Statutory tax rate

11. Contingent liabilities
The Companies were contingently liable under guarantees for bank loans of afﬁliated companies and other companies as of March 31,
2019 and 2018 as follows:

Unsecured

The signiﬁcant differences between the statutory tax rate and the Companies' effective tax rate for ﬁnancial statement purposes were set
forth in the table below.

¥

2019

Millions of yen
209

¥

2018

239

Thousands of U.S. dollars
2019
$
1,881

12. 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.
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.
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.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Law, all additional paid-in capital andall legal earnings reserve may be transferred to other capital surplus and retained earnings, respectively, which are potentially available
for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the nonconsolidated ﬁnancial statements of
the Company in accordance with Japanese laws and regulations.

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

2019
30.6%

2018
30.8%

1.7
(0.5)
(1.3)
0.7
(2.3)
(1.7)
(10.0)
2.4
19.6%

1.1
(0.2)
(1.3)
0.6
(2.0)
(1.3)
(0.6)
27.1%

Components of the Companies' deferred tax assets and liabilities as of March 31, 2019 and 2018 were as follows:

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
¥

¥
¥

¥

Millions of yen

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

¥

¥

¥

2018

Thousands of U.S. dollars
2019

2,876
140
1,483
4,843
9,342
(3,975)
5,367$(3,143)(152)(168)(3,463)
1,904

$

$

$

26,893
16,61013,99642,673
100,172(34,132)
66,040(21,292)(1,259)(1,623)(24,174)
41,866

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.

Financial Information

13. Provision for losses on sales contracts
Provision for losses on sales contracts included in cost of sales for the years ended March 31, 2019 and 2018 was as follows:¥

53

TAKUMA 2019 ANNUAL REPORT

Millions of yen
2018
2019
1,400
¥
373

Thousands of U.S. dollars
2019$12,613

TAKUMA 2019 ANNUAL REPORT

54

Financial Statement
16. Comprehensive income
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:
2019

Millions of yen

Thousands of U.S. dollars

2018

2019

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

Reclassiﬁcation adjustments
Subtotal, before tax
Tax (expense) or beneﬁt
Subtotal, net of tax¥(2,552)

¥

3,395

$

(22,994)

(0)

(111)

(0)

(2,552)

3,284(22,994)780(1,009)7,028(1,772)

¥

2,275

$

(15,966)¥

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

¥

82

¥

(13)

$

738

-

-

-

82

(13)

738

(24)

10

(219)

58

¥

(3)

$

¥

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

¥

(9)

¥

(4)

$

(77)

-

-

-

(9)

(4)

(77)

-

-

-

(9)

¥

(4)

$

(77)

Millions of yen
Year ended March 31, 2019¥

Reclassiﬁcation adjustments

4

¥

135

(63)

Total
Reportable segment income
Depreciation$

Year ended March 31, 2018
Outside customers

Reportable segment income

1,253Year ended March 31, 2019

(383)

Sales:¥(1,627)

¥

2,299

$

93,558

3,057(14,654)-¥ 121,951

8,468¥ 121,951

166

-

87

368

621

(621)

-

93,724

3,057

16,955

8,836

122,572(621)

121,951¥¥

16,868

¥

¥

¥

164

¥

905

¥

362

¥

13,836¥(2,232)¥

11,604

¥

574

¥

10

¥

159

¥

20

¥

763

¥

35

¥

798

Domestic
Environment
and Energy

Overseas
Environment
and Energy

Package
BoilerEquipment
andSystem Business

Total

Adjustment

Consolidated¥

89,8503,401

17,267-¥ 118,199

7,681¥ 118,199

225

-

54

16

295

(295)

-

90,0753,401

17,321

7,697

118,494(295)

118,199

¥

¥

¥

¥

¥

10,488

¥

78

¥

1,015

¥

229

¥

11,810¥(1,780)¥10,030

¥

559

¥

12

¥

170

¥

19

¥

760

¥

30

¥

790

Thousands of U.S. dollars

45

Total other comprehensive income

Consolidated

Others:(14)

870

Adjustment

12,405

Total

1,219

$

Total

¥

Intersegment

139

31

Equipment
andSystem Business

Sales:

34

108¥

Package
BoilerMillions of yen

(43)
96

Overseas
Environment
and Energy

Others:Tax (expense) or beneﬁt¥¥

Intersegment

Subtotal, before tax
Subtotal, net of tax

Domestic
Environment
and Energy

Sales:

Depreciation

Remeasurements of deﬁned beneﬁt plans
Increase (decrease) during the year(3) Information about reported segment proﬁt or loss and other material items
Reportable segment information for the years ended March 31, 2019 and 2018 was as follows:

519

Foreign currency translation adjustments
Increase (decrease) during the year

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

Outside customers

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

(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.”

Outside customers

Domestic
Environment
and Energy

Overseas
Environment
and Energy$ 842,938$

Intersegment
Total
Reportable segment income

Package
BoilerEquipment
andSystem Business

Total

Adjustment

Consolidated-$ 1,098,753

27,545$ 151,975

76,295$ 1,098,753

1,503

-

785

3,317

5,605

(5,605)-

844,441

27,545

152,760

79,612

1,104,358(5,605)

1,098,753$ 124,657$ (20,106)$ 104,551$$ 111,769

$

1,475

$

8,153

$

3,260

5,168

$

95

$

1,429

$

184

$

Others:17. Segment information(Supplemental information - Accounting Standard for Disclosures about Segments of an Enterprise and Related 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 segmentsin 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.

$

$

6,876

$

311

$

7,187

Adjustments in reportable segment income include eliminations of transactions between segments and corporate expenses not allocatedto reportable segment expenses, including selling, general and administrative expenses not attributable to reportable segments.
Total reportable segment income is adjusted with operating income reported on the Consolidated Statements of Operations.
Disclosure of information relating to segment assets is omitted since assets are not allocated to business segments.

Financial Information

Domestic Environment and Energy
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

Depreciation

Overseas Environment and Energy
Waste combusting power plants and biomass power plants
Package Boiler
Compact through-ﬂow boilers and vacuum water heating systems
Equipment and System Business
Construction equipment, equipment for semi-conductor industry and cleaning systems

55

TAKUMA 2019 ANNUAL REPORTTAKUMA 2019 ANNUAL REPORT

56

Financial Statement(Related information)
Reportable segment information for the years ended March 31, 2019 and 2018 was as follows:(1) Information about products and services
Disclosure of this information is omitted since similar information is disclosed in Note 17, “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）
The note is omitted because it is not important.
（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 2019 ANNUAL REPORTTAKUMA 2019 ANNUAL REPORT

58

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