May 31, 2024

TAKUMA Co., Ltd.
Main Q&A at Financial Briefing 2024 for FY2023 (ended 3/2024), held on May 24
Q1. Why is the increase in operating profit in the Domestic Environment and Energy Business in FY2024 notas significant as the decrease in FY2023?
A1. The factors behind the year-on-year increase in FY2024 are that the additional costs related to O&M measures(around ¥1.0 billion) will be eliminated, and there will be an improvement in the EPC project mix (around ¥0.4billion). Meanwhile, sales in the business are expected to decline by around ¥10.0 billion year on year. The
improvement in operating profit will not be as significant due to the impact of this decrease in sales.
Q2. In the 14th Medium-Term Management Plan, you have allocated ¥10.0 billion for M&A and business
investments. If that amount is not fully spent, is it possible that this will be used for shareholder returns
since it will result in excess cash and deposits?
A2. M&A deals are on the rise in the market. We’re actively looking into these deals, too, so we basically plan to put¥10.0 billion into M&A and business investments combined. If we do not get to ¥10.0 billion with M&A, we’realso considering directing it toward growth investments, such as research and development related todecarbonization technologies.
The Japanese government’s target for achieving carbon neutrality is 2050. If we calculate backward from there,
we can see that it will be necessary to establish the basic technology for CCUS at waste incineration facilities
to an extent by 2030. This year, we will conduct a small-scale demonstration test using a customer’s facility. We
are also looking into constructing a pilot plant for demonstration tests during or after the period of the 15thMedium-Term Management Plan. As this will require a considerable amount of funds, if the investment budget
is not fully used during the current medium-term management plan, it may be carried over to the next mediumterm management plan.
Q3. The amount of cross-shareholdings to be sold during the 14th Medium-Term Management Plan (¥3.0billion) is about the same as the actual amount sold during the previous Medium-Term Management Plan(¥2.0 billion). Do you have any plans to sell more cross-shareholdings and use the funds for further
purchase of treasury stock?
A3. The ¥3.0 billion in this medium-term management plan is a minimum target. If possible, we hope to sell morethan that. The funds from those sales will be applied to shareholder returns, such as dividends and purchase oftreasury stock.

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Q4. I understand you intend to secure about ¥30.0-40.0 billion in cash and deposits as working capital and abusiness risk buffer. Is this scale of cash and deposits really necessary, given that the cost of additional
measures last fiscal year was only ¥1.0 billion, even with the problem at the waste treatment plant?
A4. Due to the nature of the business model in our plant business, payments come before receipts. In particular,
payments from government agencies are often made only once a year, so we believe we must keep two to threemonths’ worth of monthly sales as cash and deposits to avoid running short on funds.
Q5. In the Domestic Environment and Energy Business, gross profit was down ¥2.4 billion in FY2023. Can
you give us a breakdown? Also, is this amount about where you expected it to settle at the beginning ofthe year?
A5. Out of the ¥2.4 billion, ¥0.6 billion was for the depreciation associated with operations at the new Harima Factory,and ¥1 billion was for additional measures related to O&M. The remaining ¥0.8 billion includes both thenegative impact of the EPC project mix and, conversely, the profit contribution from increased sales of aftersales services. The EPC project mix was mostly in line with our initial expectations, but there were some energy
plant projects for which we were unable to pass on price increases to our customers, which consequently pushed
down profit.
Q6. I understand you expect increased profit in FY2024, but don’t you need to consider the risk of higher
commodity prices?
A6. We regularly review this by analyzing cost information, so at this time, we do not consider it a significant risk.
Q7. You said that you will work on establishing a revenue model utilizing recurring revenue model businesses
under the 14th Medium-Term Management Plan. Does that mean that even if you were to take orders for
EPC at lower prices, you would just need to generate profit from recurring revenue model businesses?
A7. We’re not considering taking orders for EPC at lower prices. We have been working on strengthening themanagement foundation to achieve our ordinary profit target of ¥20.0 billion by FY2030 (ending 3/2031). This
includes the hiring of human resources and production equipment updates we carried out under the 13thMedium-Term Management Plan. Based on that, we aim to actively expand orders during the current mediumterm management plan and build up our recurring revenue. However, if we are unable to generate profit inEPC, it will make it difficult to achieve the targets in the next medium-term management plan and for
FY2030.

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I will explain the progress on sales in the EPC Business based on the chart above so it will be easier to understand.
When the construction period for a plant is four years, the process from order acceptance to completion can bebroken down into design, design/procurement, construction, and construction/trial operation, each lasting one
year. If you break that down into the sales composition by year, orders received four years ago (construction/trialoperation) and three years ago (construction) account for the majority of sales in the EPC Business in the current
fiscal year.

The reason for the ambitious order volume targets of ¥230.0 billion in FY2024, ¥180.0 billion in FY2025, and¥190.0 billion in FY2026 in the current medium-term management plan is that orders received during theseperiods will lead to sales in the period of the 15th Medium-Term Management Plan and thereafter. For example,

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the significant contribution to sales and profits of EPC orders in FY2024, shown in orange in the above chart,will be from FY2026 to FY2028.
So, to answer the original question, we intend to build up our recurring revenue as a strategy to realize our longterm vision while fully utilizing our technological capabilities to generate solid profits in the EPC Business.
Q8. In the 14th Medium-Term Management Plan, what is the reason for the substantial increase in operating
profit in the Domestic Environment and Energy Business from FY2025 to FY2026?
A8. As shown in the chart we looked at earlier, we assume that sales will increase starting in FY2026 as a result ofvigorous EPC order acceptance in FY2024, leading, in turn, to profit growth. In addition, we have been bringing
more mid-career hires on board to expand our resources, so personnel expenses are also relatively higher. From
FY2026 onward, this will result in an appropriate workforce size in relation to our sales, so the profit margin
will also increase. Furthermore, based on the gradual decrease in depreciation, we are projecting a substantial
increase in profit in FY2026 and beyond.
Q9. It seems you are hiring more mid-career employees. Will you be able to achieve your three- and six-yeartargets for order volume with the number of employees you are currently planning to hire and yourproduction capacity?
A9. We believe that the planned scale will be sufficient to meet our target of ¥200.0 billion in sales for FY2030. On
the other hand, considering the growth starting in FY2030, there is a possibility we may increase our mid-career
hiring again in a few years.

-END(Disclaimer)
Information related to performance forecasts, business plans, and related topics included in this document is basedon data currently available to the Company and on certain assumptions that are deemed to be reasonable. This
information includes elements of risk and uncertainty.
Please note that actual performance may diverge significantly from these forecasts for a variety of reasons.
Takuma is under no obligation to update, revise, or announce changes to forward-looking statements in this document
following its publication, except as required by applicable laws and regulations.
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