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

1. Reflections on the 11th Medium-Term Management Plan
2. Business Environment
3. Positioning of the 12th Medium-Term Management Plan
4. Policies of the 12th Medium-Term Management Plan
5. Financial Target
6. Core Business Units and Emphasis of Future Activities

1. Reflections on the 11th Medium-Term Management Plan
Initiatives of the 11th Mid-Term Management Plan
(2015 to 2017)
Theme
Build upon our previous results to further improve ourbusiness in terms of both quantity and quality in order toachieve sustained growth.

Policies
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Maintenance and expansion of market position in theEPC business
Expansion of businesses that generate base profits
Initiatives that target growth markets
Further enhancement of thecompany’s financial strength
Human resources management
Cultivation of a robust
organizational culture1) Initiatives to implement policies

Results and issues
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In our EPC business, we established a certain position in the markets
we serve by steadily harnessing robust demand to drive orders.
We built a foothold to expand our presence by capturing orders for
multiple large biomass power plants and sludge-fueled power
plants.
Businesses that generate base profits allowed us to generallyachieve the profit targets outlined in the plan, contributing to stableconsolidated earnings.
Preparing a stage for overseas expansion and developing humanresources continue to be important issues.
We maintained a certain level of equity ratio thanks to continued
profitability.
Efforts to secure adequate manpower, for example through midcareer hires, as a way to accommodate growth in orders faceddifficulty due to a shortage of workers. Tight labor conditions
persisted.
Compliance and CSR awareness spread throughout the Group
thanks to ongoing initiatives.

Perspectives
Creation of customer value
Ongoing innovation
Accommodation of environmental changes and risk
management

Biomass Power Plant

Sewage Sludge-FueledPower System2

1. Reflections on the 11th Medium-Term Management Plan

2) Quantitative results

 Business volume expanded steadily against a backdrop of robust demand. Order value significantly exceeded the plan, while theorder backlog grew to the JPY 200 billion level.
 In terms of quality, we achieved the level of profit outlined in the plan and made smooth progress toward our goal of reachingordinary
200,000 profit of JPY 10 billion in FY2020.
16,000150,000

Order value
Sales
Ordinary profit
Line indicating ordinary profit of JPY 10 billion

100,000

50,000

00

2009

2010

2011

2012

2013

2014

2015

2016

2017
(Billion JPY)

11th Medium-Term Management Plan results

9th Medium-Term
Management Planresults (2009 to 2011)

10th Medium-Term
Management Planresults (2012 to 2014)

Order value

257.8

371.0

99.9

191.0

177.1

468.0

400.0

Sales

285.2

296.5

113.0

116.3

118.1

347.5

360.0

Ordinary profit

13.7

25.7

9.6

11.6

10.6

31.9

27.0

Order backlog

78.1

152.5

139.4

214.1

273.0

2015

2016

2017

11th Medium-Term
Management Plantargets

Total*Order backlog figures are provided for the last year of each Medium-Term Management Plan and for the end of each fiscal year.

−32. Business Environment
 We expect to see continued robust demand in the Group’s principal business domains.
 At the same time, the business environment is expected to undergo major changes over the medium and long term, includingchanges in demand in response to evolving national policies and the structure of society, increased reliance on comprehensive
contracts due to a trend to outsource government services, and increasing sophistication and diversity in customer needs.

Current 3-year period(12th Medium-Term Management Plan)

Future(medium and long term)

Waste treatment
plants (Japan)• Renewal and service life elongation demand will continue as
facilities age.
• Renewal and service life elongation demand will eventually fall off.
• There will continue to be demand for more efficient energy use• The market will contract due to the aging and shrinking of Japan’sand additional functionality (development of disaster prevention
population.
and peripheral facilities, etc.).
• The trend to outsource government services (by making use of• Comprehensive contracts for plant operation, for example in the the private sector) will gain momentum.
form of DBO and O&M arrangements, will become more common.

Water treatment
plants (Japan)• Renewal demand will increase as sewage treatment plants age.
• Demand for converting sewage sludge into energy will grow.
• PPP arrangement (that make use of the private sector) will beembraced by the sewer industry.

• There will continue to be demand from FIT projects.
• The number of plants targeted for maintenance will continue toBoiler plants (Japan)
grow as more plants come online.
• Demand for plant operational management and O&M will grow.

• Comprehensive contracts for plant construction and operation,such as PPP/PFI arrangements, will become more common.
• There will continue to be demand for energy conservation, energy
creation, and resource use.
• Demand for renewable energy will continue as society works toachieve a new energy mix by 2030.
• Use of regional distributed biomass will continue.
• There will continue to be a certain level of demand for renewal
and fuel conversion of existing plants.

*DBO : Design Build Operate / O&M : Operation & Maintenance / PPP : Public Private Partnership / PFI : Private Finance Initiative / FIT : Feed-in Tariff42. Business Environment

Current 3-year period(12th Medium-Term Management Plan)

Future(medium and long term)

Boiler plants(overseas)• Demand for biomass power plants in Southeast Asia will remainrobust.
• Our flagship bagasse-fired boiler plants will continue to faceintense competition, especially from manufacturers in countries
such as India and China.

• There will continue to be a certain level of demand against thebackdrop of rich biomass resources.
• Demand for using a variety of fuels such as EFB will grow.

Waste treatment
plants (overseas)• Demand for Waste to Energy will grow in Southeast Asia due togrowing urbanization, and an increase in, and diversification of,waste.
• Market development will be gradual due to institutional andfinancial issues, amongst others.

• The market will expand as economies grow.

Package boilers(general-purposeboilers)• A certain level of demand will continue due to factors such as
renewal demand even as the Japanese market matures.
• Demand for energy-conserving boilers will grow overseas
particularly in emerging nations.

• The Japanese market will contract due to the aging and shrinkingof the country’s population.
• The market will expand further as emerging nations’ economies
grow.

Equipment andsystems• A certain level of demand will continue for both building
equipment and semiconductor manufacturing equipment asconstruction demand rises and investment in the semiconductor
industry expands.

• A certain level of demand will continue for both building
equipment and semiconductor manufacturing equipment.

*EFB : Empty Fruit Bunch

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3. Positioning of the 12th Medium-Term Management Plan The plan represents the final stage of the current medium- and long-term vision (corporate vision), for which FY2020 is thetarget year.
 During its three years, we will achieve the vision and boost our corporate capabilities to prepare for steady growth in the futurein response to future changes that are forecasted to occur in the business environment.
Previous mediumand 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 renewable energy utilizationand environmental protection.
Ordinary profit of JPY 10 billion in FY2020 (Build structures capable of consistently earning ordinary
profit of at least JPY 10 billion even as the business environment undergoes major changes.)

12th Medium-Term
Management Plan(FY2018 to FY2020)

11th Medium-Term

Management Plan(FY2015 to FY2017)

10th Medium-Term
Management Plan
(FY2012 to FY2014)

9th Medium-Term
Management Plan

Reinforcement of businessfoundation for stability andprofitability

Profitability through selection
and concentration ofresources

Cumulative ordinary profit results(FY2009 to FY2011)

Steady expansion in terms ofboth quantity and quality

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

Strengthening of corporate
capability to facilitate steadygrowth
Cumulative ordinary profit target

JPY 33.0 billion

Cumulative ordinary profit results

JPY 31.9 billion

JPY 25.7 billion

64. Policies of the 12th Medium-Term Management Plan By undertaking five new policies in line with the three perspectives continued from the 11th Medium-Term Management Plan, wewill strengthen profitability and competitiveness while working to strengthen our management foundation, with a focus oneffective use of human resources. In this way, we will strive to achieve our medium- and long-term vision while building a robust
business and management foundation in response to future changes in the business environment.

Policies
1. Strengthening and expanding our revenue
foundation
2. Achieving sustained growth
3. Increasing productivity, for example byreforming business processes
4. Using human resources effectively
5. Continuing to pursue compliance management

Perspectives for achieving our policies
1. Creation of customer value
Strive to create new value from the customers’ perspective and avoid pricecompetition by working closely with, and developing a deep understandingof, customers.

2. Ongoing innovation
Achieve sustained differentiation by pursuing innovation in terms of bothtechnologies and business models, and leverage that differentiation tocreate the value demanded by customers.

3. Accommodation of environmental changes andrisk management
Adapt to changes of the business environment in which the company
operates (e.g., changes in the economic climate, revisions to applicable laws,
and changes in customer needs) and strengthen initiatives to treat suchchanges as business opportunities.

Achieving our vision
Building a business and management foundation that is resilient during change
74. Policies of the 12th Medium-Term Management Plan
1. Strengthening and expanding our revenue foundation
Many of the Group’s products are used for a long period of time, for example for 20 or
30 years from the time of delivery. Offering high-quality after-sales service in an
ongoing manner so that customers can use those products more effectively and over alonger period of time contributes to both customers’ and the Group’s 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 wemeet customers’ diversifying needs in an individualized manner.

2. Achieving sustained growthOver the 80-years since the Group’s founding, we have built a reputation as anessential part of society by providing products that 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 Takuma’s strengths such as the technologies, trackrecord, experience, and expertise that we’ve accumulated through our businessactivities to date. In addition, we will work to secure sustained growth by securing andcreating competitive advantages as we respond quickly to changes in the businessenvironment, such as evolving customer needs and emerging social issues.

3. Increasing productivity, for example by reforming
business processes
The nature of the Group’s businesses is undergoing major evolution as the businessenvironment changes, for example due to changes in social structure such as theshrinking and aging of Japan’s population and the emergence of more advanced anddiverse customer needs as well as social issues.
We will strive to improve productivity, make effective use of human resources, andfurther increase the level of value we provide by fundamentally reviewing andrebuilding business processes that have become increasingly complex in order toaccommodate these changes while focusing on businesses with higher added value(which will help us create and provide value).

4. Using human resources effectively
We will work to hire and train the diverse workforce that will be essential as we develop
the Group’s businesses going forward. At the same time, we will strive to create anenvironment that keeps individual employees engaged in their work and able to makefull use of their skills and abilities (by cultivating a healthy workplace culture, reforming
individual awareness, and facilitating fulfilling workstyles).

5. Continuing to pursue compliance management
The Group considers compliance to be a key foundation of its corporate activities, andwe’ve worked to spread awareness and foster adoption of good practices by including
compliance as a policy in the last several Medium-Term Management Plans.
Awareness of the importance of compliance has steadily taken root among ouremployees thanks to ongoing awareness-raising and educational activities, and we willcontinue to pursue such initiatives to ensure that the trust we’ve built up in our quality
and integrity remains unshakable. In addition, we will work to further spread andimprove compliance awareness throughout the Group by effectively implementing andutilizing mechanisms such as our internal reporting system and CSR awareness survey.

85. Financial Target(Billion JPY)

Target:3-year cumulative consolidated ordinary
profit of JPY 33 billion
The 12th Medium-Term Management Plan, which represents thefinal stage of our current medium- and long-term vision,
establishes the above targets to guide our achievement of thevision’s goal of consistently earning ordinary profit of JPY 10billion while simultaneously directing the company to utilize all its
resources to build a robust business and managementfoundation in response to future changes in the businessenvironment.

50050400

40300

30200

20100

1000
10th Plan

11th Plan

Order value (left scale)
Ordinary profit (right scale)12th Plan
Sales (left scale)(Unit: Billions of yen)

10th Medium-Term Management Plan results11th Medium-Term Management Plan results

20122015

2013

2014

Total

2016

2017

Total

12th Medium-Term Management
Plan
FY2018 to FY2020

Order value

109.2

148.0

113.7

371.0

99.9

191.0

177.1

468.0

Sales

96.3

96.3

103.8

296.5

113.0

116.3

118.1

JPY 400 billion (approx.)(3-year cumulative total; referencevalue)
347.5

Ordinary profit

7.1

9.4

9.1

25.7

9.6

11.6

10.6

31.9

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

96. Core Business Units and Emphasis of Future Activities
Municipal Solid Waste Treatment Plant Business

Water Treatment Plant BusinessBusiness Environment

Business Environment As facilities age, there is ongoing robust demand for renewal andservice life elongation.

 There is growing demand for sludge incineration plants that conserveand create energy.

 Volume is growing for DBO projects as well as O&M services forexisting facilities.

 There is increasing use of PPP/PFI arrangements in the sewer
business.

Emphasis of Future Activities

Emphasis of Future Activities

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

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

Waste-to-Energy Plant

Sludge-Fueled Power System
Demonstration Plant

DBO Project
Treatment capacity: 174 tons/day
Generating capacity: 3,800 kW
Waste-to-Energy Plant
Primary equipment improvement project
Treatment capacity: 810 tons/day
Generating capacity: 17,200 kW

Treatment capacity: 35 wet tons/day (withmoisture content of about 70%)
Generating output: About 100 kWh/hMoving bed upflow continuous sandfiltration system (high-speed)
Treatment capacity: 29,500 m3/day

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6. Core Business Units and Emphasis of Future Activities
Boiler Plant Business (Japan)

Boiler Plant Business (Overseas)
Business Environment

Business Environment
 FIT demand remains robust.

 Demand for biomass power plants in Southeast Asia remains robust.

 The number of plants targeted for maintenance is increasing as
facilities are completed and transferred to customers.

 Our flagship bagasse fired boiler plants continue to experience
intense competition.

 There is growing demand for plant operational management andO&M.

Emphasis of Future ActivitiesEmphasis of Future Activities Capture new orders for FIT biomass plants.

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

 Strengthen our maintenance structures.
 Scale our waste management expertise horizontally to otherbusinesses.

Bagasse Fired Boiler Plant (Thailand)

Wood Chip Biomass Power Plant
Generating capacity: 22,100 kW
Wood Chip Biomass Power Plant

Bagasse Fired Boiler Plant (Thailand)

Generating capacity: 1,990 kW

116. Core Business Units and Emphasis of Future Activities
Waste Treatment Plant Business (Overseas)

Package Boiler BusinessBusiness Environment

Business Environment
 There is a growing need for proper waste management and energy
utilization against a backdrop of growing urbanization, increase ofwaste volume, and diversification of waste characteristics.

 We’re continuing to see a certain level of demand in Japan,
particularly in terms of renewal demand.

Emphasis of Future Activities

Emphasis of Future Activities

 Build structures to facilitate collaboration with partner companies.

 Maintain and expand our domestic business.

 Build schemes for entering new markets.

 Expand our overseas business.

 The need for energy-conserving boilers is increasing overseas,
particularly in developing nations.

Waste-to-Energy Plant (UK)
Treatment capacity: 1,370 tons/day
Generating capacity: 36,650 kW

Super Eqos
EQi Series
Waste-to-Energy Plant (China)
Treatment capacity: 1,600 tons/day
Generating capacity: 30,000 kW

Super Vacotin Heater
GTL Series

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