Torishima Report 2018

Torishima Report 2018
Fiscal 2017 (From April 1, 2017 to March 31, 2018)

Less than a year to go until
our 100th anniversary!

The electricity used to print
this report is converted by
100% green power (windpower).

TORISHIMA PUMP MFG. CO., LTD.

Tel: +81-72-690-2308
http://www.torishima.co.jp/enMeet Torishima

CSV

Creating Shared Value

Torishima’s 4 Business Domains
Torishima conducts CSV (creating sharedvalue) management in which we help solve
society’s challenges while making a profit forthe company. By providing energy-efficientsolutions and products that can address
society’s challenges, Torishima is enhancing
profitability and providing a competitive edge
while creating value both for society and for
itself.

Torishima is an expert in pumps. We develop and supply pumps for various industry and infrastructure applications.
We also provide comprehensive pump solutions ranging from the engineering, procurement, and construction ofpumping stations to their operation and maintenance.

Providing high-efficiency and reliable engineered
pumps that respond to customers’ increasingly
advanced and diversified needs

Offering well-proven expertise and experience as
an EPC (engineering, procurement, construction)
contractor

Torishima supplies highly engineered pumps for a wide range ofapplications such as power plants, seawater desalination plants,
petrochemical plants, and other general industrial plants. We continuallyrevise and improve our technology to meet our customers’ needs.

Not just a pump supplier, Torishima has a long history of supplying
pumping stations. We have been providing a turnkey service to ourcustomers whereby we can design, engineer, procure, construct, andcommission all the equipment within a pumping station.

Torishima’s Role

Energy-Efficient Solutions

Providing Safety and Reliability

We contribute to greater efficiency in plants and otherinfrastructure by supplying high-efficiency pumps and otherenergy-efficient products, and by providing energy-efficientsolutions for pumping equipment and pumping stations.

Our state-of-the-art technology ensures safety under all conditions.

Projects
High-Tech
Pumps
4 Businesses
Centeredon Pumps

Societies around the world face the same challenges: how
to save energy, combat climate change, achieve peace,and overcome poverty and starvation. Member countries of
the United Nations have set the Sustainable Development
Goals (SDGs), a list of goals for 2030 aimed at protecting
the planet, ensuring that all people enjoy peace andprosperity, and securing a sustainable future for humankind.
The United Nations urges companies to contribute to thiseffort through their business and technologies. Torishima
is responding to this call by working towards the SDG
objectives through its business and social contribution
activities. (The following pages of this report show the icons
for each of the SDGs that Torishima is contributing to.)Torishima’s 4 Business Domains��������������������������������������������������P.2
Financial and Non-Financial Highlights����������������������������������������P.3
Progress in ‘Beyond 100’ 2019 Medium-Term Business Plan�������P.4
Management Strategy and Message from the President��������������P.5
Topics�������������������������������������������������������������������������������������������P.9
ESG

Directors�������������������������������������������������������������������������������P.17
Executive Officers�����������������������������������������������������������������P.18
Financial Section
Financial Data from the Past 11 Years���������������������������������������P.19
Consolidated Financial Statements������������������������������������������P.21

Corporate Data���������������������������������������������������������������������P.26

Environment������������������������������������������������������������������������������� P.11
Society��������������������������������������������������������������������������������������P.13
Governance��������������������������������������������������������������������������������P.15

Announcing our 100th anniversary logo

Theme: Smile Together

Torishima Report 2018

On August 1, 2019, Torishima will markits 100th anniversary since foundation.
To start off the many activities
celebrating this milestone, our 100th
Anniversary Committee has decided
on the 100th anniversary logo. The
committee narrowed down the 130
designs submitted by employees tojust five, which employees voted on tochoose the favorite.

Maximizing the life span of plants withintegrated service solutions

We offer customers total support in the design, installation, andmaintenance of facilities such as wind power and mini/micro hydropowersystems.

Torishima is committed to providing the highest-quality aftermarket
services. Our innovative solutions can enhance performance andincrease the life span of pumps. This allows operators to maximize
efficiency, reduce maintenance costs, and conserve energy.

Editorial Policy
This marks the third year since we reorganized the contents of the CSR
Report (in Japanese) and the Annual Report (in English) to create theTorishima Report (Japanese and English editions), the aim of which is tocommunicate to the public Torishima’s corporate value, including thecompany’s financial and non-financial elements. Please refer to our
website for further information of the company.

Financial Data Reference Source

The two zeros of ‘100’ in our logo resemble ‘infinity’ (∞) to signify our never-ending
efforts to grow and contribute to society.
The two circles in our logo—representing both ‘100’ and the infinity symbol—are drawn
to represent a pump and a face. The message is that our pump business brings smiles
to people by providing water, safety, and reliability.
The logo is blue because the color represents water, progress, and safety and reliability.
Like water in a pump, the logo represents the ongoing virtuous circle connecting
Torishima to its customers.

1

Renewable Energy andthe Environment

Contributing to a low-carbon society
through the use of renewable energy

Contents

Service
Solutions

In preparing the Japanese and English editions of the Torishima Report,
we strove to avoid any major discrepancies between the two in terms ofcontent. Please note, however, that the financial results (including
consolidated financial statements) in the Japanese edition wereexcerpted from the securities report for the year ending March 31, 2018.
The English edition, meanwhile, contains excerpts from financial
statements that were audited by an audit company. Please visit the IR
section of our website for further information, including financial
statements.

Organizations Covered
This report covers the activities of Torishima Pump Mfg. Co., Ltd. and its consolidated subsidiaries.
Some of the information is on Torishima Pump Mfg. Co., Ltd. only.

Period Covered
The report basically covers the financial reporting period from April 1, 2017 to March 31, 2018. For
information on items occurring after April 1, 2018, the date is included on the relevant page.

Referenced Guidelines
Torishima has endeavored to make a report that will generate unique value for the company. We
referred to the International Integrated Reporting Framework published by the International Integrated
Reporting Council (IIRC) and the Environmental Reporting Guidelines (2012 version) published by the
Ministry of the Environment, Japan.

Cautionary Statement with Regard to Forward-Looking Statements
The data and forward-looking statements disclosed in the Torishima Report are based on decisions
made and on information obtained up until the day this report was published. The forward-looking
statements are subject to change due to various factors, and they do not guarantee the attainment ofobjectives, forecasts, or future business performance. The information in the report is subject to change
without prior notice. Therefore, readers are cautioned to use the information in the report at theirdiscretion while referring to—or comparing the report with—other sources of information. Torishima
bears no obligation whatsoever to compensate for any damages that may occur as a result of using thisreport.

Torishima Pump Mfg. Co., Ltd.

2

Financial Highlights

Note: Fiscal years ended March 31.

Net Sales (millions of yen)

51,304
Orders Received(millions of yen)
52,847
52,84746,501

45,98545,98546,50146,501

43,483 42,233

51,30451,30440,47940,47943,483 42,233
43,483 42,233

42,87842,87844,414 45,381

Netof yen)40,479Net Sales
Sales (millions(millionsof yen)Orders Received (millions of yen)
42,87845,985

1,462

44,414 45,381
44,414 45,381

(945)
(945)

FY
2014

FY
2015

FY
2016

FY
2017

FY
2013

FY2017:
FY
FY
FY
FY
FY
Domestic
were 2017below
asFY public-sector
FY
FYorders2016
FY
FY
2013
2014
2015
2013resulting
2014 in falling2015 just2016
planned,short 2017of overalltargets. But domestic private-sector orders andoverseas orders turned out as planned.

FY
2014

FY
2015

FY
2016

FY
2017

FY2017:FY
FY
Targets
achieved.
FY
FY
2013
2014
2013
2014

FY
FY
2015
2015

FY
FY
2016
2016

FY
FY
2017
2017

400

373

400
400

373
373

FY
2014

FY
2015

1,462
1,462

(millions of yen)

1,209.10

Net
Net Income
Income oror Loss
Loss Attributable
Attributable totoOwnersoftheParentOwnersoftheParent(millions of yen)(millions of yen)442

1,308.22

1,240.33
1,179.57 1,221.94

EquityEquity Ratio
Ratio (%)(%)

1,308.22
1,240.33
1,209.10 1,308.22 1,179.57 1,221.94
1,240.33
1,209.10
1,179.57 1,221.94

854
854

(2,422)FY
2017

FY2017:
While the profit margin improved, targets were notachieved. The main reasons for this were theprovision of allowance for losses on construction
contracts and allowance for doubtful accounts due
mainly to the prolongation of projects in the Middle
East, and an increase in selling, general, andadministrative
expenses
Equity Ratio(%) due to business expansion
at overseas service subsidiaries.

Net
Net Assets
Assets per
per Share
Share (yen)
(yen)

854

405

FY
2016

1,257
1,257

The Torishima Group is implementing its Medium-Term Business Plan, which runs from fiscal 2017 to 2019, the year of
Torishima’s 100th anniversary. In the three-year period covered by our ‘Beyond 100’ 2019 Medium-Term Business Plan, we
will complete measures we have been implementing up to now and prepare to build momentum for our second century ofbusiness. In the process, we will improve our fundamental strengths so that we can withstand external environmental factors.

2019 Medium-Term Business Plan

FY2013:
FY
FY
FY
FY
FY
Income2013
fell due2014
to several
FYFY
FY factors:
FYyen appreciation
FY
2015
2016
2017
2013
2014product
2015
2016
2017
affectedsales, while
standardizationand system
reforms disrupted engineering and manufacturing.

Net Assets per Share (yen)

1,532
1,532
1,532

FY
2013

1,257

FY2014–2016:
Following a thorough revamping of profitability,
profits recovered and in FY2016 rose substantially.

Net Income or Loss Attributable to
Owners of the Parent

2019 Medium-Term Business Plan

Operatingof yen)Operating Income
Income oror Loss
Loss (millions(millions of yen)

(945)

FY
2013

Progress in

49.9

50.0

48.7

48.9

47.0

49.9
49.9

50.0
50.0

48.7
48.7

48.9
48.9

47.0
47.0

442
442

405
405

FY
2013

FY
2014

(2,422)(2,422)
FY
2015

FY
2016

FY
2017

FY
2013

FY
2014

FY
2015

FY
2016

FY
2017

FY
2013

FY
2014

FY
2015

FY
2016

FY
2017

FY
FY
2013
2013

FY
FY
2014
2014

FY
FY
2015
2015

FY
FY
2016
2016

FY
FY
2017
2017

FY
FY
2013
2013

FY
FY
2014
2014

FY
FY
2015
2015

FY
FY
2016
2016

FY
FY
2017
2017

FY
FY
2013
2013

FY
FY
2014
2014

FY
FY
2015
2015

FY
FY
2016
2016

FY
FY
2017
2017

FY2015:
Income fell due mainly to transient factors including
exchange-rate losses and investment losses.

Plan Actual

44.5 45.4

Plan

46.0

Capital investment

Depreciation and amortization

2,139
2,139
1,646
1,646

1,636
1,221

Capital investment
Capital 1,561
investment

1,636
1,636
1,221
1,221

1,561
1,3911,561
1,391

FY2014FY2015FY2013

1,391

46.0

5.4%
4

4.3%
2.9%

0

FY20172

FY2018FY2019(100th anniversary)

Depreciation and amortization
1,636
1,599
Depreciation
and amortization

1,084

Torishima’s aim
Develop world-leading productsthat offer energy efficiency, safety,
and reliability, and create abusiness model to this end

Long-term
challenges

Innovative
Capabilities

R&D expenditure

1,599
1,599
1,084
1,084
FY2016

883
1,636
1,636
883
883

FY2017FY2013
FY2014FY2015FY2016FY2017FY2013
FY2014FY2015FY2016FY2017
In order to survive fierce global competition, we invest aggressively in
production facilities, related equipment, software, and R&D. For example, weare expanding our service bases overseas.

R&D expenditure
R&D expenditure
678
678

FY2013
FY2013
FY2013

484

453

430

484
484

453
453

430
430

FY2015FY2016FY2017658
658

FY2014FY2014FY2014FY2015FY2015FY2016FY2016

Improve the company’s
fundamental resilience to external
environmental factors
After-Sales
Service
Capabilities

FY2017FY2017

Governance

Torishima’s After-Sales Service Network

Service facilities establishedat 10 Torishima bases worldwide
U.K.
China
Saudi Arabia

U.A.E.
India

Japan
Taiwan (Facility preparation underway)
Philippines
Singapore

ThailandIndonesia

2013: ‌Completed service facility, Torishima Pumps (India) Pvt. Ltd.
(Bengaluru, India)
2016: Established‌Torishima Service Solutions (Saudi Arabia) Ltd.
(Dammam, Saudi Arabia)
Established Torishima Service Solutions (Thailand) Ltd.
2017: Established‌Torishima Service Solutions Asia Pte. Ltd.
Philippines Office (near Manila, Philippines)

FY2019Actual

Plan*

Plan*

Orders received

44.0

42.2

45.0

46.0

Net sales

44.5

45.4

46.0

46.0

Operating income

2.0

1.3

2.0

2.5

Ordinary income

2.5

1.5

2.0

2.5

FY20260

Net income attributableto owners of the parent
company

1.8

0.9

1.4

1.8

* Adjusted in May 2018

Torishima’s long-term challenges and measures
towards achieving the 2019 Medium-Term Business Plan

Productivity,
Work Process
Quality

678Intellectual
Capital(millions of yen)
658
Intellectual
Capital(millions of yen)

FY2017620FY2018Initial Plan

8

40Intellectual Capital (millions of yen)

Manufactured
Capitalof yen)Manufactured
Capital (millions(millions of yen)
2,139
1,646

Plan

Global Strength

Manufactured Capital (millions of yen)(billions of yen)

60

FY2017:
Despite securing profit, targets were not achieved
as a result of the effect of operating profit and loss.

Non-Financial Highlights

2019 Medium-Term Business Plan

Targetoperatingprofit margin
10%or higher

Operating profit margin (%)

52,847

Operating Income or Loss (millions of yen)

Sales (billions of yen)Orders Received (millions of yen)

Build a flexible corporate
infrastructure(mechanisms, people)

Human
Resources

Targets of2019 Medium-Term Business Plan

Main efforts in fiscal 2017• ‌Enhance core pump products, introduce
new products

Developed and enhanced condensate
pumps and hot well pumps for power plants
P.10• ‌Develop new systems for the after-sales
service market by utilizing technologies suchas IoT and 3D

Completed product development
Currently preparing for market release• ‌Build an optimal global production system(plants in Japan, China, Indonesia, India)

Preparing to manufacture boiler circulation
pumps for power plants in India

• Use
‌
state-of-the-art equipment to boost
productivity and expand production capacity

Continued to upgrade and install equipment
in head office factory 
P.9• ‌Firmly establish and continuously improve
process innovation

Improved systems for information sharing• ‌Cover more regions(Americas, Southeast Asia)

Expanded Singapore service facility,
established service base in the Philippines,
prepared to establish subsidiary in Taiwan
P.9• ‌Increase number of supervisors and train
them

Currently training 40 supervisors to be sales
engineers• ‌Have service solutions business account for
35% or more

36% achievement rate in fiscal 2017• ‌Increase number of products that can beserviced

Implementing and expanding sales inservicing of small/medium steam/gas
turbines in Indonesia• Improve viability of Board of Directors

Identified problems with Board of Directors
and built system for reforming Board of
Directors• ‌Introduce performance-based compensation
systemPassed resolution regarding introduction oftransfer-restricted stock compensation at
general shareholders meeting in June 2018

• ‌Strengthen management of worldwide
subsidiaries

Launched TGT Administration Department• Reform working styles

Prepared to launch Work-Style Reform
Promotion Section in fiscal 2018

• Promote‌diversity (improve work environment
for women and foreign nationals)

Achieved certification for Kurumin, theJapanese government’s recognition ofcompanies that help employees balance
work and parenthood• ‌Hire and foster globally minded people

Foreign nationals accounted for 43% of
employees on consolidated basis

Bases with service facilities

3

Torishima Report 2018

Torishima Pump Mfg. Co., Ltd.

4

Management Strategy and Message from the President

Successfully achieving the objectivesof our medium-term business plan
Kotaro Harada
President and CEO

In the last few years we haveincreased the number of our service
bases in the high-potential Asianmarket, our service solutions
business now accounts for 36% of
overall business.
With only one year to go until Torishima’s 100th
anniversary, we’ve completed the first year of our2019 medium-term business plan, “BEYOND 100.”
Although we didn’t receive as many orders as wewere aiming for, our proactive initiatives both in Japanand overseas saw net sales reach our target and our
profit ratio steadily improve. However, due mainly tothe prolongation of projects in the Middle East, we
had to provision against allowance for losses on
construction contracts and allowance for doubtful
accounts. This meant that we missed our targets
for operating, ordinary, and net income. To take evenbigger leaps forward as we go beyond the 100th yearof our founding, we are implementing each of thesteps in our medium-term business plan and soundly
consolidating our foothold for future advances.

5

Torishima Report 2018

Service solutions—the key to our medium-termbusiness plan—are growing steadily. In fiscal 2016,
we set up a subsidiary in Thailand with service
facility capabilities. Following this, in fiscal 2017 welaunched new service bases in Taiwan, thePhilippines, and Malaysia. Torishima Service
Solutions Asia (TSSA), a subsidiary we establishedin Singapore in 2012, carried out structural reforms
and aggressive sales activities, which led tosignificantly higher customer recognition and amajor boost in orders. To increase its capacity tohandle these orders, it moved to a new facility thatis more than four times bigger than the previous
one. Despite beginning operations as recently as
April 2017, the Thai subsidiary achieved theremarkable result of posting a profit in its first year.
With the inclusion of our new Asia-based facilities,
we now have 10 service bases throughout theworld that incorporate a service facility. The ratio of
our service solutions to overall orders hasconsequently risen steadily. Ten years ago, theratio of services to other business was around
10%. Now it has now grown to 36%, alreadyOur service solutions business is expanding(orders received)
Value of service orders received
Ratio of service orders to overall orders received
billionsof yen

20

36.0

36.7

27.6

15

%

40.0

30.0

22.0
10

5

0

20.0

11.3

2015

12.0

2016

15.2

16.5
10.0

2017

2018

Despite unfavorable market
conditions for thermal power
generation, we’re continuing withbold initiatives and working tomaintain Torishima pumps.

0.0

Plan

meeting the goal of 35% that we set in our mediumterm business plan.

The market for thermal power generation is battlinga headwind. Even India and China—countries that
had previously been slow to address climatechange—have halted construction of new coalfired power plants. Meanwhile, in France and theUK, officials have declared that all new vehicles
must be electric in the not too distant future. The
world is finally committing itself to eliminating theuse of fossil fuels.
From a different perspective, the latest forecasts
from the UN estimate annual global population
growth of 83 million people. Many emerging
nations currently lack sufficient electric power. As
capacity from renewable sources increases,
thermal power will make up a smaller percentageof overall power generation capacity. Even so,

Torishima Pump Mfg. Co., Ltd.

6

Management Strategy and Message from the President

Capacity of power generation facilities worldwide

Coal

Oil

Gas

NuclearRenewables

Gigawatts (GW)
1 million kW = 1 GW
12,00010,000

5,175

8,000

3,550
6,000

468

492

516

2,087

2,325

2,571

2,800

334

287

259

233

2,020

2,228

2,296

2,360

2,434

2016

2025

2030

2035

2040

2,151

4,000

404

413

2,000

1,621
439

1,650
443

1,963
2015

32.2%

61.6%

Renewable energy reaches
50.0% of the total

4,349

448

1,986

0

5,978

Thermal power, at 5,467 GW,
accounts for 45.7%

Since fiscal 2009 we have strengthened our sales
efforts for the Eco-Pumps that we promote underthe “Go Green with Pumps” slogan. Our promotionof the energy efficiency of these pumps—which
won an award in the 2014 Energy Conservation
Grand Prize program—has led to steadily
increasing sales. In fiscal 2017, the pumps
generated three times as many orders as in fiscal
2009. Torishima Eco-Pumps boast low electricity
consumption and sophisticated technology that
we cultivated in manufacturing our large highefficiency pumps. Eco-Pumps have been used infactories, commercial facilities, and elsewhere,
and we expect to see their sales flourish.

Source: “World Energy Outlook 2017” published by the International Energy Agency (IEA)

In the area of renewable energy, Torishima has
been supplying boiler feed pumps for biomass
power generation since the 1980s. We now holdmore than 60%*1 of the Japan market. Japan’s
introduction of the feed-in tariff (FIT) system in2012 helped increase the economic viability ofbiomass power generation and led to rapid market
expansion. By 2030, this market is expected to
grow to 1 trillion yen*2. Annual orders for Torishimabiomass boiler feed pumps used to number in the
single digits, but recently we’ve been receiving
tens of orders per year. In fiscal 2017, our improved
pump model for geothermal power generation was
well received both at home and abroad. Comparedto the main forms of thermal power generation,

7

Torishima Report 2018

*1 ‌Torishima calculation of product deliveries in and after 2010
(including scheduled deliveries) to 1 MW–150 MW biomass power
plants*2 ‌Yano Research Institute Ltd. “Examination of the Biomass Energy
Market 2017”

We comprehensively coverseawater desalination plants,
water infrastructure renovation,
and Eco-Pumps.
In recent years, the seawater desalination market
has been in a slump caused by low crude oil
prices. The market now appears to have bottomedout, with large-scale projects starting up in the
Middle East and elsewhere. Although this market
remains competitive, we achieved success byoffering an improved seawater supply pump. We
also received large-scale orders for reverse
osmosis (RO) plants in Singapore and Saudi
Arabia.
In Japan, we continued to receive public-sector
orders for pumps to be used to renovate aging
water infrastructure. Our double-suction bellmouthand vortex-preventing ring devices are in highdemand as measures against torrential rain. The
superior technology of these devices was given anaward by the governor of Osaka Prefecture. We’rehonored that our technology has been recognized
for making a contribution to society. It’s theembodiment of Torishima’s goal of creating sharedvalue (CSV).

With the aim of steadily and more strategically
implementing the goals of our medium-termbusiness plan, we undertook dramatic structuralreforms starting in fiscal 2018. To smoothly andprecisely meet the diverse and changing needs ofour customers, we laid out a system of three front
divisions: the Public Sector Division, Private Sector
Division, and Overseas Division. Under this structural

We also actively began capital investment into ourhead office factory. By updating aging production
facilities with the latest equipment, we are shortening
the manufacturing process, continually improving
quality, and expanding in-house production to
improve production efficiency. Furthermore, wewill also commence a reconstruction project toconsolidate our head office building and factory,
while improving earthquake resistance. The move
will establish a fresh place where our new front
system (three-division system), middle structure(quality management, information systems,
administration department), and manufacturing
structure (development/design, procurement,
manufacturing) can come together as one to lead
Torishima boldly into the future.
Our initiatives aim to create a basis upon which
Torishima can continue to grow past its 100th
anniversary. We now renew our resolve toward
those goals. To our stakeholders—with whom weshare various points of connection—I again offer
my gratitude and ask for your continued supportand understanding.

Structural Reforms
BeforeSales div.

Although it’s unlikely that many new coal-fired
thermal power facilities will be built, demand willcontinue for combined cycle power generation—ahighly efficient method fueled by natural gas. There
are numerous thermal power plants around theworld that have our pumps installed. For these
existing power plants to operate stably and efficiently,
they need to be carefully maintained. This includes
periodic overhauls of boiler feed pumps. To capture
this demand, we have added more service basesin the Asian market, where our product delivery
figures are particularly high. These bases allow us
to offer our customers more localized support. With
our advanced technological capabilities, we are
equipped to maintain not just our own pumps, but
those of other manufacturers too.

biomass and geothermal power generation makeup a small fraction of the energy market. But we
see huge growth potential in these areas.

Common divisions

demand for thermal power is still expected toincrease steadily in absolute terms to meet thegrowing needs of developing economies.

To achieve our goals morestrategically, we enacted structuralreforms. As a reborn Torishima,
we seek to make further strides
ahead.

reform, each division contains the functions ofsales, technological proposals, installation, andafter-sales service.

Technological proposals, after-sales service,
and EPC (engineering, procurement,
construction) were managed by a common
division, transcending departmental borders

After

Independent organizations separated according
to customer: public-sector demand,private-sector demand, and overseas demand

Public-Sector Private-Sector
Sales
Sales

After-Sales
ServicePublic-Sector
Division

Private-Sector
Division

Overseas (TGT)Division

TGT* pumps

TGT project

Sales

Sales

Sales

Application Engineering Group (AEG)

Technological
proposals

Technological
proposals

Technological
proposals

Plant Engineering Group (PEG)

EPC

After-sales
service

EPC

After-sales Service Division

After-sales
service

TGT service

After-sales
servicePump Design, R&D

Pump Design, R&D

Procurement, Manufacturing

Procurement, Manufacturing

Quality Management, Information Systems, Administration

Quality Management, Information Systems, Administration* TGT: Torishima Global Team

Torishima Pump Mfg. Co., Ltd.

8

T O P I C SNews in Fiscal 2017
Let’s look at some Torishima initiatives from fiscal 2017 that improved our value.

New and Updated Equipment
Installed at Head Office Factory

Expanding Service Basesin Asiain Asia, boost customer satisfaction, and lead tofurther business growth.

Any manufacturer, if it wants to improve quality andproductivity, must upgrade its existing machineryand install new equipment. Torishima’s 2019
Medium-Term Business Plan calls for us to use
state-of-the-art equipment to boost productivity andexpand production capacity. This in turn will improvethe company’s fundamental resilience to external
environmental factors. To this end, we’ve been
accelerating the renewal of machinery and theintroduction of new equipment since fiscal 2016.
One example is pumps for power plants, which are
increasingly being operated in environments whereload fluctuations are more severe than ever before.
There is therefore a need to produce pumps witheven greater reliability and durability. To produce
such pump models, we installed new high-precisionmultifunction shaft lathe machines and highprecision electrical discharge machining (EDM)
machines in fiscal 2017.

Established near Manila in November 2017, our new
Philippines Office allows us to communicate moreclosely with our customers in the Philippines. It is a
representative office of Torishima Service Solutions
Asia Pte. Ltd. (TSSA), our local service solutions
company based in Singapore. In the Philippines,
Torishima has already delivered numerous pumps
for use in waterworks, sewerage, thermal power
plants, and general industry. We anticipate anincreasing demand for maintenance services for all
pump types in the region

R&D: Advanced MMTV Vertical
Mixed-Flow Multistage Pump
with Canister

Shaft Lathe MachineThis device machines the shaft, a key component ina pump. It can also machine the keyway thatconnects the shaft and the impeller. This machine isextremely precise and its installation will improvemachining efficiency and productivity.

Singapore was where Torishima set up its firstoverseas office—in 1979. Later, in 2012, weestablished TSSA in Singapore, which has sincefunctioned as a service hub for all our service needs
in Southeast Asia. In December 2017, TSSA moved
its service facility to the Tuas Planning Area near
Jurong Island, where many of TSSA’s customers arelocated. At 4.3 times its previous size, the expanded
TSSA service facility was built to deal with anincrease in orders and further anticipated growth.
The expansion will allow TSSA to provide more
efficient and effective maintenance services in the
future.

Improved Pump Efficiency andSuction Performance
CFD (computational fluid dynamics) technology
was used to develop pump hydraulics with an
improved shape that would optimize fluid flow.

Expelled steam from a steam turbine is converted towater in a condenser and then pumped back to theboiler via Condensate Extraction Pumps. The
Torishima designation for such application is our
MMTV vertical multistage pump. Torishima has
already delivered MMTV pumps to numerous power
plants.
There is great demand today for better energy
efficiency. Using the latest CFD (computational fluid
dynamics) technology and production techniques,
we improved the MMTV’s pump hydraulics, which inturn raised pump efficiency and suction performance.
Improved suction allowed us to make the canister
shorter and slimmer, and thus reduce civilengineering costs. As well as offering improved
performance and lower energy consumption, theadvanced MMTV has another major advantage: as
its basic structure and mounting dimensions are
identical to those of Torishima’s previous models,customers can upgrade to the advanced MMTV at alow cost, without having to change their existing pipelayout or many of its components.

Smoothing out the conduit surface (casting surface)
reduced losses due to friction.

Discharge

EDM Machine
An arc discharge—rather than a cutting process—isused to remove a portion of the surface of workpieces. This enables highly precise machining of
keyways on the impellers, which in turn leads tohigher reliability, durability, and quality for pumps
built to operate in severe environments.

By needing to replace
only the bottom half ofthe pump, customers
can reduce costs
Inside TSSA’s service facility, Singapore

The Torishima Taiwan Branch has delivered numerous
pumps for thermal power plants. These include highpressure pumps, such as boiler feed pumps, andlarge pumps, such as circulating water pumps.
These pumps need on-site servicing and overhauls.
To meet such demands, we established Torishima
Service Solutions Formosa Co., Ltd. as a new service
center.
Expanding our service network throughout Asia will
help to embed our marketing and service activities
in local communities. This will enhance our presence

9

Torishima Report 2018

Pump body
IntakeCanisterHydraulics

Canister is shorter
than previous models

Canister diameter is smaller
than on previous models

Torishima Pump Mfg. Co., Ltd.

10

ESG

Environment

In the environmental area of CSR, Torishima focuses on contributing to the environment throughits products and business activities, while also lowering the environmental burden of all its
business activities.

Torishima
Environmental Policy— Philosophy —At Torishima, we believe that protecting the Earth’s
natural environment is a vital task that must be
addressed by all mankind. For the sake of theplanet and all of its inhabitants, our goal must be tocultivate a naturally beautiful global environmentthat is conducive to comfortable living. Throughour pumps and other eco-friendly products, we
supply environmentally sustainable systems thatare engineered to enrich living environments
everywhere. We conduct production activities so
as to be in harmony with environmental demands,
and we offer products that have minimal
environmental loads. In this way, we are working tobring about developmentally sustainable societiesthat can support a healthy global environment wellinto the future.
— Activities —Status of Fiscal 2017
Environmental Objectives

By developing and supplying environmentallyfriendly products such as energy-efficient pumps(high-efficiency boiler feed pumps, Eco-Pumps,
and large high-efficiency pumps), wind powersystems, and mini/micro hydropower systems,
Torishima contributed to reducing CO2 emissions,as shown in the graph below.

Tonnes600,000
500,000

CO2 reductions frommini/micro hydropower systems
CO2 reductions
from high-efficiency pumps
CO2 reductions
from wind power systems

2,429

2,673

401,418

420,750

2,742

1,548

400,000
367,706

449,142300,000
200,000
100,000

To put the foregoing philosophy into practice,
we undertake the following activities:
1. We develop and supply highly efficient, environmentallyfriendly pumps that contribute to energy savings;
2. We develop and supply wind power and hydropower
generation systems that use natural energy sources.
This contributes to a reduction of CO2 emissions;
3. We provide technologies targeting the reuse of wastematerials, as a way of enhancing the recycling of
natural resources;
4. We actively promote reductions in environmental loads
and prevention of environmental contamination, basedon environmental assessment results;
5. We continually strengthen our environmental
management systems in order to raise environmental
performance;
6. We comply with environmental laws, regulations, andother applicable obligations. We also formulate andcomply with our own in-house rules;
7. Throughout our production activities, we seek topreserve energy and natural resources and promote
recycling, waste reduction, and proper management ofchemical substances. These actions serve to reduce
environmental burdens.

011Torishima Report 201886,22285,89985,835FY2014FY2015FY2016FY2017

Tonnes
40.0

2.24

30.0

Up 18%
1.98

31.1

30.8

2.33
29.4

29.3

1.85

In fiscal 2017, total CO2 emissions from the head
office factory rose by 18% year-on-year, and CO2
emissions per production unit* went up by 1%.
CO2 emissions (tonnes) andCO2 emissions per production unit (kg/1 million yen)

4,496
4,000

297
4,123

270

287
4,233

338
4,270

Up 1%

300
250
200

3,000

150

2,000

100
1,000

50
FY2014FY2015FY2016FY2017CO2 emissions per production unit (kg/1 million yen)
CO2 emissions from head office factory (tonnes)

02,968 kL (up 1%)

Up 0.5%

Gas oil 0.2%
Utility gas 4.6%

2.00
1.50

Electricity 93.4%

1.00
10.0

0

0.50
0.00
FY2016FY2017

Waste per production unit

Waste

FY2014FY2015‌ educing Discharge of PRTR
R
Class 1-Designated Chemicals
In fiscal 2017 Torishima achieved a 37% year-onyear reduction in the amount of discharged andtransferred chemical substances covered by the
PRTR (pollutant release and transfer register)
system in Japan. This was thanks to installing paintbooths equipped with activated charcoal
deodorizing systems. We keep striving to estimate
the required paint volumes more accurately, while
reducing the amount of cleaning agents we use.

Tonnes
25.0

1.6

13.3

10.0
5.0
0

1.3
8.1

1.4

Down 37%

FY201439,066 m3 (up 93%)
Tap water
28,027 m3 (down 56%)

Industrial-use
water

OutputTorishima head office

CO2 emissions (year-on-year)

4,270 tonnes (up 1%)
Waste (year-on-year)

29.4 tonnes (up 0.5%)

9.4

5.1

5.7

FY2015FY2016

Xylene1,088 tonnes (down 30%)

1.1
5.9

7.5

Water consumption (year-on-year)

Recycled resources (year-on-year)

20.0

Toluene350

Up 18%

5,000

Energy consumption,
converted into crude oil (year-on-year)

Kerosene 1.8%

3.3

Environmental Friendlinessthroughout the Value Chain

FY2017Ethylbenzene

Per production unit:(kg/1 million yen)
TonnesTorishima head office

20.0

15.0

Saving Resources and Energy

Input

Per production unit:(kg/1 million yen)
2.50

PRTR Class 1-designated chemicals released
and transferred (tonnes)

Initiatives for Reducing Environmental
Burden in Production Activities

0

April 10, 2018
Kotaro Harada, President and CEO,Torishima Pump Mfg. Co., Ltd.

85,986

In fiscal 2017 at the head office factory, the amountof waste per production unit was up 18% year-onyear, while the amount of waste was almost on apar with the previous year, rising slightly by 0.5%.
Waste per production unit (kg/1 million yen)and total waste (tonnes)

Pump Business, Renewable Energy andthe Environment Business

CO2 reductions (tonnes)

Reducing Waste

Energy Consumption and Input
Torishima fully understands the impact its businessactivities place on the environment. Ever aware ofthis impact, we do all we can to reduce theenvironmental burden at every stage of ouractivities, from product development to disposal. In
fiscal 2017 at the head office, electricity usage
increased by 1% and waste by 0.5% year-on-year.

Torishima’s freight volume is below that of a specified
consigner, as designated under the Japanese Act on
the Rational Use of Energy. Nevertheless, we
implement various measures to further reduce freight
volume. We have set a target in our environmental
management program of reducing freight volume
tonne-km* between shippers and suppliers in aneffort to lessen our environmental impact.
Specifically, we are raising the load efficiencies offreight trucks and pursuing well-planned freighting
to prevent sporadic shipments. These and othersteady day-to-day efforts enable us to achieve
company-wide improvements in transport efficiency.
* Tonne-km = Freight weight (tonne) × transport distance (kilometer)

Torishima Pump Mfg. Co., Ltd.

12

ESG

Society

Torishima strives to be a trusted company in its relationship with society by fulfilling its social
responsibilities. To this end, we communicate in every way possible with our stakeholders.

Customers
Long-term trust

Suppliers,
Business
Partners

Employees
Employment,
human resource
development

Stakeholder
Engagement

GeneralPublicRelationship with Customers

Relationship with Employees

We strive to respond to customer needs by providing themwith high-value-added products and services that increase
their satisfaction.

Torishima has always considered human resources a vital asset that companies should nurture. We consistently
create workplace environments that enable employees to work safely and worry-free, and we provide learning
opportunities that promote employees’ growth.

Torishima’s efforts
Sales activities, “Go Green with Pumps” seminars, productexhibitions, etc.

Employee Education
Torishima actively offers educational opportunities
and support, such as providing technical training
on pumps and on-the-job training for new
employees. We also offer grants to help employees
obtain a Ph.D. in engineering or a national technicalqualification, and we facilitate distance learningand seminars by outside organizations to boost
employees’ skills. “Seeing is believing” is the motto
for Torishima’s overseas on-site training for young
employees. The goal of this intensive training
program is to enable employees to identify
customer needs and the seeds of new businessbeyond national boundaries.

Communication tools
Website, brochures, etc.

Contribution tosociety

Fair dealings

Shareholders,
Investors
Appropriate disclosure

Torishima took part in Sewage
Works Exhibition ’17 Tokyo.
Every year at this exhibition, weshow customers in the domestic
sewage works industry theadvantages of Torishima products.

Relationship with Business Partners

Relationship with Shareholders and Investors

To maintain a good relationship with our subcontractor
partners, Torishima selects such partners on thebasis of transparent and impartial transactions. We
also seek to establish equal partnerships with themwhile complying with all related laws and regulations.

We do everything possible to release company
information in a timely, fair manner so thatshareholders and investors can get a deeper
understanding of our sustainable growth.

Torishima’s efforts
Joint Torishima-subcontractor meetings aimed at
improving occupational safety and health; safety
conferences, occupational safety and health manager
workshops, and safety patrols aimed at eliminating
workplace accidents and calamities; etc.

Torishima’s efforts
General shareholders’ meetings, financial results
briefings for institutional investors, the Sawakami
Fund’s investment briefings for individual investors,
etc.
Communication tools
Website, financial results summaries, financial
results presentation materials, financial statements,
shareholder newsletters, Torishima Report, fact
sheets, etc.

Relationship with Communities
We contribute to society, communities, and education,and strive for safe and stable operation of our factories
so that everyone living near Torishima bases can livein safety and peace of mind.
Harada Memorial Foundation
The Harada Memorial Foundation is a public interest
incorporated foundation. In 1981, then-president
Ryuhei Harada launched the foundation with apersonal contribution. The foundation provides grants
to individuals and organizations engaged in researchin natural science domains connected to the pumpindustry, such as hydraulics and fluid mechanics. It
also offers scholarships to young people.
Number of research grants

275 cases

Number of scholarships

1,059 students

Torishima’s efforts
Pump classes at elementary schools, sponsorship ofevents such as Takatsuki Citizens’ Sports Day and the
Takatsuki City Half Marathon, etc.

Torishima cooperated in a
first-hand experience
program called OpenTakatsuki, sponsored by the
Takatsuki City Tourism
Association, by opening its
factory for public tours.
Many visitors commented
that the tours were a great
opportunity to see how
pumps are manufactured.

Safety and Health Policy, Major Activities
In April 2010, Torishima was certified for the JISHA(Japan Industrial Safety and Health Association)
OSHMS (Occupational Safety and HealthManagement System) standards. We work to
reduce risks by conducting risk assessments ofmechanical equipment, operational procedures,and chemical substances.
Diversity
For Torishima to grow sustainably in a global
market, we need to use personnel diversity to ouradvantage. Torishima actively hires non-Japanese
staff and works to foster employees with a global
perspective so that we can strengthen ourcompetitive edge in the global market.
On July 19, 2017, Torishima was awarded theKurumin mark from the Osaka Labor Bureau of the
Ministry of Health, Labor, and Welfare for being acompany that supports employees in balancing
their work and child-raising. In addition to an inhouse daycare center, we strive to create anenvironment conducive to employees taking
maternity leave and parental leave. As a result ofsuch measures, our percentage of women
returning to work after childbirth is 100%.
Torishima also offers two-week workplace
experience and training mainly for students fromlocal special-needs schools.
This has resulted in 18 students
with disabilities who have undergone this training joining thecompany. Torishima provides
guidance and support so thatthey can feel they are part of
the Torishima team and nurture
their own hopes and dreams
for the future.

Safety and Health Policy
Basic Philosophy
Torishima contributes to society through businessactivities that include the development andmanufacture of pumps and related products. At thesame time, we regard creating a safe, healthy
environment—one where employees can work free ofworries and where their health is maintained or evenenhanced—as the basis of our QCD (quality, cost, anddelivery) actions. We have thus formulated a basic
policy on safety and health and are building a cultureof safety and health that aims for a virtuous cycle. And
we seek to be a vibrant company that continues togrow forever.

Basic Policy
1. We constantly aim to raise the level of safety andhealth by steadily implementing our occupationalsafety and health management system and throughongoing improvement activities.
2. We identify hazardous factors in the workplacethrough risk assessments and take countermeasureson an ongoing basis so that we can reduce risks toan absolute minimum.
3. We comply with all safety and health-related laws
and regulations and company standards in an effort
to further our safety and health management.
4. We seek to create a comfortable workplace foreveryone concerned by ensuring effective
communication among Torishima employees andamong other people working at Torishima sites.
5. We aim for zero accidents and disasters by raising
employees’ awareness of safety and health througheducation and training.
6. In executing safety and health activities, we invest
the appropriate management resources andimplement effective improvements on an ongoingbasis.
April 1, 2018
Kotaro Harada,
President and CEO
Haruhisa Sumi,
Safety and HealthGeneral Manager(Total from 1981 to 2017)13

Torishima Report 2018

Torishima Pump Mfg. Co., Ltd.

14

ESG

GovernanceCompliance Structure

To grow sustainably and raise corporate value in the medium to long term,
Torishima is strengthening its corporate governance and its framework for risk management,internal control, J-SOX compliance, and other items.

Corporate Governance Structure
As of June 26, 2015, Torishima shifted its corporate
governance structure to one of a company with an
Audit and Supervisory Committee. Under thisstructure, directors who are members of the Audit
and Supervisory Committee (including three outside
Audit and Supervisory Committee members) are
given voting rights on the Board of Directors. This
strengthens the supervisory functions of the Boardof Directors and enhances Torishima’s corporate
governance structure.
The accounting auditor cooperates with the Audit
and Supervisory Committee and the Internal Audit
Department to efficiently conduct effective audits
while exchanging information and views.

The Internal Audit Department, which is independent
from business operations, conducts internal audits
from an unbiased perspective and with a focus on
the efficiency, effectiveness, and legality of business
operations. It also audits overseas Torishima Group
companies in light of the globalization of Torishima’s
business activities.
For the future, Torishima will aim to raise corporate
value by increasing the effectiveness of the Boardof Directors. We will also enhance management ofdomestic and overseas subsidiaries in an effort tostrengthen governance. Furthermore, we will
introduce a performance-based compensation
system that will enable the sharing of value
between directors and shareholders.

Torishima’s Governance Structure

Company Units

General Shareholders’ Meeting
Appointment/
Dismissal

Selection/
Supervision

Organizations in Charge of Conducting BusinessSupervision/
Auditing

Board of Directors(all directors)

Opinion Statements(on nomination andcompensation of directors)

Appointment/
Dismissal

Suggestions/
Reporting

Audit and Supervisory Committee(directors who are members of the Audit
and Supervisory Committee)

Reporting
Collaborating

President

Collaborating

Instruction

Executive Officers
Committee

Instruction

Internal Audit Department

Instruction

Compliance Committee
Risk Management Committee
Safety and Health Committee

Reporting

Reporting

Guidance/
AdviceAuditing/Instruction

Executive Officers
Business Divisions
Administrative Divisions

Quality Committee
Environment Committee

Auditing/
Instruction

Duties of the Compliance Committee
1. ‌Develop legal and ethical compliance systems for
Torishima and its subsidiaries, which together makeup the Torishima Group
2. P
 rovide guidance and advice to business execution
divisions regarding the results of internal audits ofcorporate ethics
3. P
 rovide guidance and advice regarding educational
planning and activities related to corporate ethics
4. ‌
Provide guidance and advice to the internal
consultation service regarding whistle-blowing

ISO 14001 Certification

Torishima has been certified for ISO 9001, aninternational standard on quality management
systems. This assures we deliver products,
engineering, and maintenance services of a qualitythat satisfies customers and earns their trust.

Torishima actively pursues ISO 14001 certification,
an international standard on environmental
management systems, and strives to protect theenvironment. All of our bases in Japan operateenvironmental management systems that comply
with ISO 14001:2015.

Date

Name

February
1997

Torishima Pump Mfg. Co., Ltd. head office factory;
Torishima Tokyo branch; Sapporo, Sendai, Nagoya,
Osaka, Takamatsu, Hiroshima, and Kyushu offices;
Yokohama, Saga, and Okinawa sales offices (Japan)

More and more of Torishima’s overseas subsidiaries and branches havebeen achieving ISO 9001 certification.

We make group-wide efforts to raise quality.

Accounting
AuditorTorishima also has a Compliance Committee and a
consultation service for discussing matters such as
workplace ethics and related laws and regulations.

ISO 9001 Certification

Basic Quality Philosophy
Earning customer trust, providing satisfaction

Date

Name

July
1999

Torishima Pump Mfg. Co., Ltd.
head office and factories (Japan)

March
2004

P.T. Torishima Guna Indonesia
P.T. Torishima Guna Engineering (Indonesia)

May
2005

Kyushu Torishima Co., Ltd. (Japan)

September
2010

Torishima Service Solutions Europe Ltd. (U.K.)

May
2012

Torishima Tokyo branch; Sapporo, Sendai,
Nagoya, Osaka, Takamatsu, Hiroshima, andKyushu offices; Yokohama, Saga, and Okinawa
sales offices (Japan)

August2012

Torishima Pump Mfg. Co., Ltd.
Qatar Project Office (Qatar)

January
2013

Torishima Pump Mfg. Co., Ltd.
Middle East Project Office (U.A.E.)

July
2013

Torishima Pump (Tianjin) Co., Ltd. (China)

Quality Policy

Auditing

Deliberation/
ReportingPrior Discussions

Appointment/
Dismissal“The Torishima Group has consistently accorded
highest priority to winning and maintaining thecustomer’s solid trust.” In line with this corporatemotto, Torishima has formulated a basic policy toensure compliance in business management. The
policy covers the observance of laws and regulations,while also stipulating fair and impartial behavior andprohibiting discrimination and acts that violate social
ethics. There are further stipulations on maintaining
discipline and order, and on remedial action to takewhen violations of the policy occur.
Torishima works to thoroughly communicate thecontent of the policy to all directors and employees,
so that they understand and follow it properly.

1. We place top priority on abiding by laws, regulations, andrules, and on giving customers safety and reliability.
2. In order to provide customers with products and services ofvalue, we make proposals and respond with a clear
understanding of customers’ needs and expectations.
3. We clarify and execute all items stipulated in contracts withcustomers.
4. We constantly create and improve on quality in all processes.
5. We set quality targets, and plan and implement the concretemeasures to realize these targets.
6. To ensure that non-conforming products and customer
complaints never happen, we conduct thorough design
review and initial-product quality control.
7. In the case of non-conforming products, we respond
appropriately and thoroughly.
8. In the case of non-conforming products or customer
complaints, we analyze them from a range of viewpoints toensure they never happen again.
9. We systematically develop employees’ capabilities as partof fostering them into self-directed individuals.
10. We constantly improve our quality management system toensure its maximum effectiveness.

For further information on Torishima’s ESG initiatives,
please visit our corporate website.

www.torishima.co.jp/en/outline/csr/

April 2, 2018

Auditing/Instruction

Reporting/Consultation

Kotaro Harada,
President and CEOGroup Companies

15

Torishima Report 2018

Torishima Pump Mfg. Co., Ltd.

16

Directors (As of June 29, 2018)

Executive Officers (As of June 28, 2018)

Chief Executive Officer

Senior Managing Executive Officers

Kotaro Harada

Tetsuya Kujima

Gerald Ashe

President

Corporate Planning Office

Corporate Planning Office

General Manager of
Manufacturing Division

General Manager ofOverseas Division

Managing Executive Officers

Nobuyuki Yoshikawa

Yoshiaki Inuyama

Koichiro Hamu

Alister Flett

General Manager ofProcurement Division

General Manager of
Public-Sector Division

General Manager ofEngineering Division

Deputy General Manager ofOverseas Division
Regional Director of
TGT* Head Office
General Manager of
TGT Sales Department

Executive Officers

Maximizing our experience and knowledge to raise themedium- and long-term corporate value of the Torishima Group
Director

Director

Representative Director

Director

Director

Koichiro Hamu

Nobuyuki Yoshikawa

Tetsuya Kujima(Member of Audit andSupervisory Committee)(Member of Audit andSupervisory Committee)

Besides doing work related
to engineering, Mr. Hamu isin charge of R&D andoverseas marketing andsales. His job is to promote
the planning anddevelopment of new
products and boost
Torishima’s overseas
marketing capabilities.

Mr. Yoshikawa has a wealthof experience in quality
assurance, CSR promotion,and manufacturing. Since
April 2017, he has been
supporting business
operations by strengthening
procurement.

Mr. Kujima’s duties havefocused on sales planning,
wind power, andprocurement. Since April
2017, he has beenpromoting innovation in
manufacturing. He wasappointed representative
director in June 2018.

Yutaka Fukuda

Hiroshi Akiyama

Mr. Fukuda draws on his
experience and knowledgein accounting, generalaffairs, and internal auditing
to strengthen Torishima’s
governance andcompliance systems.

Mr. Akiyama was appointed
as a director in June 2016.
Using his wealth ofexperience that includes
being a lawyer and working
as an outside auditor atother companies, heoversees the strengtheningof Torishima’s governanceand compliance systems,
particularly from a legal
perspective.

Director(Member of Audit andSupervisory Committee)

Akira Tsuda
Mr. Tsuda has a wealth ofexperience, knowledge, andsuccess working at othercompanies as a director
and in other management
positions. Using an
objective viewpoint
independent of Torishima’s
management members, heprovides sound proposals
and advice to thecompany’s Board of
Directors.
17

Torishima Report 2018

President andRepresentative Director

Kotaro Harada
Since being appointed
president and representative
director in June 2006,
Mr. Harada has demonstrated
strong leadership at the coreof Torishima’s management
and has striven to boost thecompany’s corporate value.
He will continue to play an
indispensable role in raising
corporate value over the
medium and long term.

Director(Member of Audit andSupervisory Committee)

Masahiro Yamazaki

Mike Choi

Haruhisa Sumi

Hiroto Takahashi

Yoshinori Hirusawa

Chairman of
Torishima Pumps (India)
Pvt. Ltd.

Regional Director of
TGT Hong Kong & Vietnam

General Manager of
Administration Division

General Manager of
Personnel Department

General Manager ofPrivate-Sector Division

Managing Director of
Torishima (Hong Kong) Ltd.

General Manager ofGeneral Affairs Department

Executive Officers

Shiro Hakukawa
With his wealth of
specialized knowledge intaxes, finance, andaccounting gained throughyears of experience as acertified public accountant,
Mr. Hakukawa brings
strengthened oversight andtransparency to Torishima’s
management.

Masahiko Ishida

Takuya Ono

Satoshi Tomizawa

Akihiro Suezawa

Takumi Yoshimura

Deputy General Manager
of Private-Sector Division

General Manager ofSingapore Office

General Manager ofMiddle East Office

General Manager ofTokyo Branch

In charge of P.T. Torishima
Guna Engineering

General Manager of
Pump Sales Department

General Manager ofPlant Sales Department

Chief Engineer ofOverseas Division*TGT: Torishima Global Team
Torishima Pump Mfg. Co., Ltd.

18

Financial Data from the Past 11 Years(Millions of yen)(Thousands of
U.S. dollars *1 )FY2007

FY2008FY2009FY2010FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2017

Orders received

50,794

46,98858,62432,97439,57940,97552,84742,87851,304

43,48342,233

398,425

Net sales

47,272

45,69245,00849,88046,45345,97445,98546,50140,47944,41445,381

428,123

Gross operating income

8,269

8,596

9,548

9,257

8,959

8,015

8,320

9,162

9,191

10,538

10,954

103,340

Operating income or loss

2,643

2,761

3,258

3,127

2,286

517

(945)

400

373

1,462

1,257

11,858

Ordinary income or loss

2,566

3,410

3,833

3,673

2,929

1,389

(632)

793

(1,663)

1,871

1,549

14,613

Net income or loss attributable to owners of the parent

1,410

1,990

2,609

1,892

1,497

943

442

405

(2,422)

1,532

854

8,057

Gross profit margin (%)

17.5%

18.8%

21.2%

18.6%

19.3%

17.4%

18.1%

19.7%

22.7%

23.7%

24.1%

24.1%

Operating profit margin (%)

5.6%

6.0%

7.2%

6.3%

4.9%

1.1%

(2.1)%

0.9%

0.9%

3.3%

2.8%

2.8%

ROE (return on equity) (%)

5.2%

8.0%

9.5%

6.1%

4.8%

2.9%

1.3%

1.1%

(7.5)%

4.7%

2.6%

2.6%

ROA (return on assets) (%)

2.3%

3.2%

4.0%

3.1%

2.5%

1.4%

0.6%

0.6%

(3.7)%

2.3%

1.2%

1.2%

Total assets

62,076

62,13265,641

61,17860,812

68,232

68,062

71,987

66,19867,71971,651

675,953

Net assets

26,03024,00631,08330,96831,77533,602

34,52436,532

32,79433,71334,017

320,915

Equity ratio (%)

41.9%

38.6%

47.2%

50.3%

51.3%

48.2%

49.9%

50.0%

48.7%

48.9%

47.0%

47.0%

Japan

20,524

19,126

20,93918,703

17,281

18,07020,096

19,104

17,06022,15325,058236,396

Asia

8,733

8,449

5,408

11,196

13,125

10,259

9,042

11,124

11,307

8,612

8,391

79,160

Middle East

14,682

13,347

16,24814,36911,43011,887

9,753

11,1158,225

10,94010,064

94,943

Others

3,331

4,770

2,412

5,609

4,615

5,758

7,092

5,156

3,887

2,708

1,866

17,604

Overseas ratio (%)

56.6%

58.1%

53.5%

62.5%

62.8%

60.7%

56.3%

58.9%

57.9%

50.1%

44.8%

44.8%

Public sector

16,525

14,835

14,575

9,973

11,60010,971

15,923

12,001

16,013

15,913

13,914

131,264

Private sector

5,578

5,245

4,517

4,921

6,205

5,733

7,144

6,943

8,396

7,973

8,914

84,094

Overseas

28,69026,90739,532

18,07921,772

24,27029,77923,93326,895

19,595

19,403

183,047

Public sector

14,445

14,09915,46913,76011,317

12,277

13,797

12,957

9,980

13,832

16,621

156,802

Private sector

6,079

5,025

5,468

4,942

5,963

5,792

6,299

6,146

7,078

8,320

8,436

79,585

Overseas

26,74826,56624,06931,17629,172

27,90425,88827,397

23,41922,261

20,322

191,717

Public sector

10,473

11,20910,316

6,528

6,811

5,505

7,631

6,675

12,707

14,78812,082

113,981

Private sector

3,208

3,428

2,477

2,455

2,698

2,639

3,484

4,281

5,598

5,251

5,729

54,047

Overseas35,52635,86751,32938,23130,832

27,19831,08927,625

31,101

28,436

27,516

259,585

SG&A (selling, general, and administrative expenses)

5,625

5,834

6,290

6,130

6,673

7,497

9,265

8,761

8,818

9,075

9,697

91,481

SG&A-to-sales ratio (%)

11.9%

12.8%

14.0%

12.3%

14.4%

16.3%

20.1%

18.8%

21.8%

20.4%

21.4%

21.4%

Depreciation

910

873

851

961

1,096

1,231

1,646

1,636

1,561

1,599

1,636

15,434

Capital investment

654

739

1,311

2,297

2,224

3,083

2,139

1,221

1,391

1,084

883

8,330

R&D expense

638

603

730

567

606

691

678

658

484

453

430

4,057

Cash flow from operations

2,511

922

4,439

735

2,661

3,513

(4,086)(1,194)

5,000

6,496

587

5,538

Cash flow from investments

578(1,259)(3,084)(75)(1,269)(3,966)(4,498)

(345)

(415)

1,376

(1,105)(10,425)

Cash flow from financial activities(1,465)

(669)

1,678

590

(2,371)

4,356

(112)

2,120

(1,624)(4,140)1,153

10,877

6
Per share information

Net income per share (yen)

54.77

77.32

100.07

67.45

53.38

33.64

15.74

14.61

(88.13)

56.15

31.50

0.3 dollars

Net assets per share (yen)1,010.45

931.13

1,105.50

1,097.71

1,112.29

1,172.56

1,209.10

1,308.22

1,179.57

1,221.94

1,240.33

11.70 dollars

7
Stock information

Dividends (yen)

15

17

18

18

18

18

18

18

18

18

0.17 dollars

Payout ratio (%)

27.4%

22.0%

26.7%

33.7%

53.5%

114.4%

123.2%

–

32.1%

57.5%

(Fiscal years ended March 31)

1
Business
performance2
Financial status

Net salesby region

3
Breakdown oforders received,
net sales, andorder backlog

Orders received
by segment

Net salesby segment

Order backlog
by segment

4
Major expenditures

5
Cash flow

20 *2
20.0%

57.5%

*1: ‌U.S. dollar amounts have been translated from yen—solely for the convenience of the reader—at the rate of ¥106 to U.S.$1.00,
the exchange rate prevailing on March 31, 2018.
*2: Includes an additional 2-yen dividend commemorating Torishima’s 90th year of business.
Note: Figures on pages 19 to 20 have been calculated based on Japanese disclosure rules.

19

Torishima Report 2018

Torishima Pump Mfg. Co., Ltd.

20

Consolidated Financial Statements
Consolidated Balance Sheet
Torishima Pump Mfg. Co., Ltd. and Consolidated Subsidiaries
Years ended March 31

Thousands of
U.S. Dollars*1

Millions of Yen

FY2017FY2018FY2018ASSETS  Short-term investments

FY2017FY2018FY2018

¥

¥

1,627

$15,349

5,997

2,703

25,5009,396

10,975103,537

61

23

216

LIABILITIES AND EQUITYCURRENT ASSETS:   Cash and cash equivalents

Thousands of
U.S. Dollars*1

Millions of Yen

CURRENT LIABILITIES:¥10,871¥11,379$107,349

58

94

886

  Receivables:  Short-term borrowings   Current portion of long-term debt

1,579  Payables:

23,664

26,644

251,358     Unconsolidated subsidiaries and associated companies

47

173

1,632

     Unconsolidated subsidiaries and associated companies    Other

198

188

1,773

    Other

1,223

1,460

13,773     Allowance for doubtful accounts

(371)

(841)

(7,933)   Advances received from customers

4,381

3,091

29,160  Inventories

8,996

9,530

89,905   Income taxes payable

337

379

3,575

   Advance payments

417

661

6,235

   Allowance for product warranties

847

722

6,811

   Deferred tax assets

655

511

4,820

   Allowance for losses on construction contracts

957

1,635

15,424   Other current assets

779

723

6,820

   Accrued expenses

1,289

1,401

13,21645,31849,067

462,896

129

110

1,037

26,20024,130227,641

5,880

11,393

107,481

337

319

3,009

1,221

1,408

13,283   Other long-term liabilities

366

382

3,603

      Total long-term liabilities

7,805

13,504

127,396    29,889 thousand shares in 2018 and 2017

1,592

1,592

15,018

7,769

7,604

71,735

118

142

1,339

    Trade      Total current assets
PROPERTY, PLANT, AND EQUIPMENT:    Trade   Other current liabilities      Total current liabilities  Land

2,499

2,490

23,490   Buildings and structures

10,141

10,084

95,132  Long-term debt   Machinery and equipment

13,114

13,491

127,273   Liability for retirement benefits   Construction in progress

71

102

962

  Lease assets

644

715

6,745

      Total

26,471

26,883

253,613   Accumulated depreciation(16,534)(17,252)(162,754)

9,937

9,631

90,858      Net property, plant, and equipment
INVESTMENTS AND OTHER ASSETS:

LONG-TERM LIABILITIES:   Deferred tax liabilities

COMMITMENTS AND CONTINGENT LIABILITIESEQUITY:  Common stock,    authorized, 60,000 thousand shares; issued  Investment securities

8,564

9,137

86,198   Inve‌stments in and advances to unconsolidated subsidiaries     and associated companies

1,532

1,544

14,566  Capital surplus  Software

1,656

1,293

12,198   Stock acquisition rights   Asset for retirement benefits

375

597

5,632

  Retained earnings

22,774

23,138218,283   Deferred tax assets

53

55

518

  Other assets

282

324

3,056

   Treasury stock—at cost   2,726 thousand shares in 2018 and 2,781 thousand shares in 2017

(1,904)(1,841)(17,367)

12,464

12,952

122,188¥67,719¥71,651$675,952

1,832

2,039

19,235672679    Foreign currency translation adjustments

742

621

5,858

    Defined retirement benefit plans

307

461

4,349

33,243

33,832

319,169

470

184

1,735

33,71334,017

320,915¥ 67,719¥ 71,651$675,952

      Total investments and other assets
TOTAL   Accumulated other comprehensive income:    Unrealized gain on available-for-sale securities    Deferred gain on derivatives under hedge accounting      Total  Noncontrolling interests      Total equity
TOTAL*1: ‌U.S. dollar amounts have been translated from yen—solely for the convenience of the reader—at the rate of ¥106 to U.S.$1.00,
the exchange rate prevailing on March 31, 2018.

21

Torishima Report 2018

Torishima Pump Mfg. Co., Ltd.

22

Consolidated Financial Statements
Consolidated Statement of Income
Torishima Pump Mfg. Co., Ltd. and Consolidated Subsidiaries
Years ended March 31

NET SALESCOST OF SALES    Gross profit
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES    Operating income

Consolidated Statement of Changes in Equity
Thousands of
U.S. Dollars*1

Millions of Yen

FY2018¥45,381
34,426
10,9549,697
1,257

FY2017¥44,414
33,876
10,5389,075
1,462

FY2018$428,122324,773
103,339
91,481
11,858OTHER INCOME:   Interest and dividend income  Interest expense   Loss on valuation of investment securities

267
(120)

338
(123)
(103)

   Loss on valuation of shares of subsidiaries and associates   (Loss) Gain on foreign exchange—net  Rent income   Equity in earnings (losses) of associated companies   Gain on sales of shares of subsidiaries and associates  Other—net    Other income—net
INCOME BEFORE INCOME TAXES

126
145
(17)
168
(59)
474
1,936

2,518
(1,132)  Deferred    Total income taxes
NET INCOME
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTSNET INCOME ATTRIBUTABLE TO OWNERS OF THE PARENT

Thousands
IssuedNumber of Number of
Shares of Shares ofCommon Treasury Common
Stock
Stock
Stock
BALANCE, APRIL 1, 2016

¥7,800¥(1,671)

¥100

8

(9)
1,764
13,622

Net income attributableto owners of the parent¥21,733

¥800

¥241

¥1,523

1

Change in the parent’s
ownership interest
due to transactions
with noncontrolling interests(2,781)¥1,592¥7,769

1,533

1,533

(492)

(492)

(240)

(240)

7

8

8

(31)
¥118

¥22,774¥(1,904)

154

(31)

(234)

(779)

117

¥1,832¥6¥743¥307 ¥33,243¥470 ¥33,713

854

854

(491)

(491)

(491)

(12)

141

1,032

854

Cash dividends,¥18.00 per share

Total
Equity(240)

1929,889Total¥483 ¥32,795(31)

Net change in the year

Noncontrolling
Interests¥190 ¥32,312

(491)
(208)

(1)
187
1,444

Yen

¥1,592

1,532

Purchase of treasury stock

(981)
(886)
1,349
905

3,632
1,726
5,367
8,254
(188)
$8,056(2,581)

Cash dividends,¥18.00 per share

(104)
(94)
143
96

385
183
569
875
(20)
¥854

29,889Stock
Capital Acquisition Retained
Rights Earnings
Surplus

Unrealized Deferred
Foreign
Gain onLoss on Currency Defined
Available-for- Derivatives Translation Retirement
Sale
under Hedge AdjustBenefit
Treasury
Securities Accounting ments
Plans
Stock

Net income attributableto owners of the parent

BALANCE, MARCH 31, 2017

336
(59)
277
1,659
(126)
¥1,532

Millions of Yen
Accumulated Other Comprehensive Income

Disposal of treasury stock

INCOME TAXES :  Current

Torishima Pump Mfg. Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2018

Purchase of treasury stock

(0)

(0)

(0)

(0)

Disposal of treasury stock

54

62

63

63

Change in the parent’s
ownership interest
due to transactions
with noncontrolling interests
BALANCE, MARCH 31, 2018

(165)

(165)
23

Net change in the year
29,889(2,726)¥1,592¥7,604¥142¥23,138¥(1,841)

329

207

65

(121)

153

¥2,039¥72

621¥461 ¥33,832

(165)
(285)

43

¥184 ¥34,017

U.S. Dollars*1

FY2017FY2018FY2018¥56.16¥55.92¥18.00¥31.51¥31.35¥18.00$$$

PER SHARE OF COMMON STOCK  Basic net income  Diluted net income   Cash dividends applicable to the year

0.30
0.30
0.17

Consolidated Statement of Comprehensive Income
Torishima Pump Mfg. Co., Ltd. and Consolidated Subsidiaries
Years ended March 31

NET INCOME

Thousands of U.S. Dollars*1
Millions of Yen

FY2017¥1,659

FY2018¥875

Thousands of
U.S. Dollars*1

Accumulated Other Comprehensive Income

FY2018$8,254

OTHER COMPREHENSIVE INCOME:   Unrealized gain on available-for-sale securities   Deferred gain (loss) on derivatives under hedge accounting   Foreign currency translation adjustments   Defined retirement benefit plans   Share of other comprehensive gain (loss) in associates     Total other comprehensive income
COMPREHENSIVE INCOME

1,032
(234)
(822)
117
(3)
88
¥1,747

206
65
(140)
153
3
290
¥1,165

1,943
613(1,320)
1,443
28
2,735
$ 10,990¥1,66779¥1,1605$ 10,943
47

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:  Owners of the parent  Noncontrolling interests

BALANCE, MARCH 31, 2017

CommonStock

Stock
Capital Acquisition Retained
Surplus
Rights Earnings

Unrealized Deferred
Foreign
Gain onLoss on Currency Defined
Available-for- Derivatives Translation Retirement
BenefitSale
under Hedge AdjustTreasury
Plans
Securities Accounting ments
Stock$15,018$73,292$(17,962)$1,113$214,849

Net income attributableto owners of the parent

8,056

Cash dividends,$0.16 per share(4,632)$17,283$56$7,009Noncontrolling
Interests

Total

Total
Equity$2,896 $313,613$4,433 $318,046

8,056

8,056

(4,632)(4,632)

Purchase of treasury stock

(0)

(0)

(0)

Disposal of treasury stock

594

594

594

Change in the parent’s
ownership interest
due to transactions
with noncontrolling interests
BALANCE, MARCH 31, 2018

(1,556)(1,556)216

Net change in the year
$15,018$71,735$1,339$218,283$(17,367)

3,084

1,952

613

(1,141)

1,443$19,235$679$5,858$4,349 $319,169(1,556)(2,688)406$1,735 $320,915*1: ‌U.S. dollar amounts have been translated from yen—solely for the convenience of the reader—at the rate of ¥106 to U.S.$1.00,
the exchange rate prevailing on March 31, 2018.

23

Torishima Report 2018

Torishima Pump Mfg. Co., Ltd.

24

Consolidated Financial Statements

Global Network

Consolidated Statement of Cash Flows
Torishima Pump Mfg. Co., Ltd. and Consolidated Subsidiaries
Years ended March 31

Thousands of
U.S. Dollars*1

Millions of Yen

FY2017FY2018FY2018¥1,936¥1,444$ 13,622

(264)
32
1,599
101
(168)

(335)
53
1,636

(3,160)500
15,433As of June 30, 2018

Torishima has delivered products to more than 100 countries and today
our network of offices, factories, and service centers spans the globe.

OPERATING ACTIVITIES:
Income before income taxes
Adjustments for:  Income taxes—paid  Income taxes—refunded   Depreciation and amortization   Loss on valuation of investment securities   Gain on sales of shares of subsidiaries and associates

17

104
(96)

981
(905)

(915)
242
(186)
1,217
1,222
223
193
644
(12)
612
4,559
6,496

(3,180)
(569)
(252)
1,871
(1,282)
430
(122)
678
(26)
234
(857)
587

(30,000)(5,367)(2,377)
17,650(12,094)
4,056(1,150)
6,396
(245)
2,207
(8,084)
5,537

(18)
29
(925)
27
(160)
(39)
2,524
(111)
24
24
1,376

(136)
97
(715)
63
(167)
(305)
29

(1,283)915(6,745)594(1,575)(2,877)273   Loss on valuation of shares of subsidiaries and associates   Equity in losses of associated companies   Changes in assets and liabilities:    Increase in accounts receivables    (Increase) Decrease in inventories    Increase in advance payments    Increase in accounts payable    (Decrease) Increase in advances received from customers    Increase in allowance for doubtful accounts    (Decrease) Increase in allowance for product warranties    Increase in allowance for losses on construction contracts     Decrease in liability for retirement benefits  Other—net    Total adjustments     Net cash provided by operating activities

Glasgow, U.K.
Torishima Europe Ltd. /Torishima Service Solutions Europe Ltd.

  Proceeds from withdrawal of time deposits  Purchases of property, plant and equipment   Proceeds from sales of property, plant and equipment   Purchases of intangibles   Purchases of investment securities   Proceeds from sales of investment securities   Payments of loans receivable   Collection of loans receivable  Other     Net cash (used in) provided by investing activities

16
13(1,105)150
122(10,424)(4,029)1,892(1,147)
(240)
(491)
(87)
(35)
(4,140)59
8,000(6,004)556
75,471(56,641)

(491)
(470)
60
1,153

(4,632)(4,433)566
10,877

(36)
3,696
7,175
¥10,871(127)
508
10,871¥11,379(1,198)
4,792
102,556$107,349

FINANCING ACTIVITIES:   Change in short-term borrowings—net   Proceeds from long-term debt   Repayments of long-term debt   Purchase of treasury stock  Dividends paid   Purchase of shares of subsidiaries without change in scope of consolidation  Other     Net cash provided by (used in) financing activities
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH AND CASH  EQUIVALENTS
NET INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEAR

*1: ‌U.S. dollar amounts have been translated from yen—solely for the convenience of the reader—at the rate of ¥106 to U.S.$1.00,
the exchange rate prevailing on March 31, 2018.
25

Torishima Report 2018

Beijing, China
Beijing Representative Office

HEAD OFFICE
Osaka, Japan
Torishima Pump Mfg. Co., Ltd.
Madrid, Spain
Torishima Europe Ltd.
Madrid Office

Riyadh, Saudi Arabia
Saudi Arabian Representative Office

Massachusetts, U.S.
North America Branch

Saga, Japan
Kyushu Torishima Co., Ltd.
TaiwanTaiwan Branch / Torishima Service Solutions Formosa Co., Ltd.
Manila, Philippines
TSSA Philippines OfficeHong Kong
Torishima (Hong Kong) Ltd.
Bangkok, Thailand
Torishima Service Solutions (Thailand) Ltd.

Gurgaon, India
Torishima Pumps (India) Pvt. Ltd.

Dammam, Saudi Arabia
Torishima Service Solutions(Saudi Arabia) Ltd.

Singapore
Singapore Branch /Torishima Service Solutions Asia Pte. Ltd. (TSSA)

Hanoi, Vietnam
TSSA Vietnam Office
Bengaluru, India
Torishima Pumps (India) Pvt. Ltd.
Dubai, U.A.E.
Torishima Service Solutions FZCO

Mexico City, Mexico
Torishima Europe Ltd.
Mexico Office

Jakarta, Indonesia
P.T. Torishima Guna Engineering /P.T. Torishima Guna Indonesia /P.T. Geteka Founindo

Abu Dhabi, U.A.E.
Middle East Project Branch

INVESTING ACTIVITIES:  Increase in saving of time deposits

Tianjin, China
Torishima Pump (Tianjin) Co., Ltd.

Victoria, Australia
Torishima Australia Pty. Ltd.

Doha, Qatar
Qatar Project Office

Corporate Data (As of March 31, 2018)

Countries where Torishima hasdelivered products (more than 100)

Share Breakdown (As of March 31, 2018)

Torishima Pump Mfg. Co., Ltd.

Individuals and others
5,634,30 shares 18.85%

Foundation: August 1, 1919

Treasury stock2,579,706 shares 8.63%

Paid-in-capital: 1,592,775,030 yen
Outstanding shares: 29,889,079
Shareholders: 6,026

Share Breakdown by
Type of Shareholder

Employees: ‌1,625 (consolidated);
861 (Non-consolidated)

Financial institutions
9,666,148 shares 32.34%
Financial instrument business operators
179,826 shares 0.60%
Other companies
7,123,924 shares 23.84%
Non-Japanese companies, etc.
4,705,172 shares 15.74%

Major Bases (As of June 30, 2018)
Major Japanese Bases

Manufacturing Bases

Overseas Offices

Head office: 1-1-8 Miyata-cho, Takatsuki City,
Osaka 569-8660, Japan

Head office factory (Osaka, Japan)
Kyushu Torishima Co., Ltd. (Saga, Japan)
P.T. Torishima Guna Indonesia, P.T. Geteka Founindo(Jakarta, Indonesia)
Torishima Pump (Tianjin) Co., Ltd. (Tianjin, China)

Singapore Office,Middle East Office (UAE),
North America Office (US),Taiwan Office,Beijing Representative Office (China),
Saudi Arabian Representative Office,
Qatar Project Office

Branch offices: Tokyo, Osaka, Sapporo, Sendai,
Nagoya, Takamatsu, Hiroshima, Kyushu, Saga
Sales offices:Yokohama, Wakayama, Okinawa

Torishima Pump Mfg. Co., Ltd.

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