June 12, 2023
TAKUMA Co., Ltd.
Main Q&A at Results Briefing for FY2022 (Ended 3/2023)
Below are the main Q&A from the results briefing (held on May 25, 2023) for FY2022.
Q1. Why did you lose the order for the DBO project in the Municipal Solid Waste Treatment
Plant Business? Also, what are your thoughts on the risk of losing orders?
A1. Contractor selection is generally carried out based on a comprehensive evaluation (a bidding
method in which proposals are evaluated based not only on price but also on non-priceelements, such as technical capabilities). We are working on enhancing our proposal
capabilities in terms of non-price elements, such as technical capabilities, but our competitors
are doing the same, so we fell short on the non-price elements in FY2022 bids. Customer
requirements are varied and include, for example, the extent of contribution to the localcommunity, response to disasters, and function as disaster prevention infrastructure. We areanalyzing the factors behind our losing bid and are working on enhancing our proposals. Asfar as the risk of losing orders goes, there is no guarantee, of course, of winning an orderbecause of the nature of the bidding process. However, we are working to provide proposals
that more accurately address the needs of our customers with the aim of steadily winningorders.
Q2. About how many personnel are required to increase the number of orders received formunicipal solid waste treatment plants? Also, when will you have that system in place?
2028? 2030?
A2. We are currently hiring and training new graduates and mid-career personnel to increase thenumber of project bids, and hiring is proceeding smoothly. By our estimates, the number ofpersonnel (non-consolidated) we would need to reach the target of 20.0 billion yen in
ordinary profit in FY2030 as set forth in Long-Term Vision “Vision 2030” is about 1,200(1,002 as of March 31, 2023). Considering the training and development period for engineers,construction supervisors, and managers, we hope to have a 1,200-personnel system in placeby around 2025 and to be able to increase the number of project bids by around 2028 to 2029
to further build up our orders received.
Q3. Is my understanding correct that you are making steady progress toward the target of
20.0 billion yen in ordinary profit for FY2030, including the costs associated with thisinvestment in human resources?
A3. We believe we are making steady progress, including not only human resources investments
but also capital investments, such as the new Harima Factory, which became operational inJanuary 2023.
Q4. Going forward, what possibilities or potential do you see as you increase the number of
non-FIT projects in the biomass power generation market?
A4. One thing is the demand for switching from fossil fuels to biomass fuels at plants that supply
the required heat and electric power to factories in order to realize a decarbonized society
1/3and reduce electric bills. For example, there is demand for plants that supply heat and powerusing biomass-based byproducts generated by the mills of timber and paper company
customers as fuel. We have received actual orders and believe that it’s a promising field. We
have also received information about the FIP plans, but we recognize that our customers are
currently taking a wait-and-see approach, considering the challenges related to fuelprocurement and the fluctuation in electricity rates they face. In any case, even if the numberof FIT projects decreases, it is not as though we will not have any non-FIT projects, so webelieve we can expect a certain level of orders.
Q5. In regard to shareholder return, what is the approximate total payout ratio? (In FY2022,
it was 48.7%, and in FY2023, it’s at 46.2% [forecast] with dividends alone.)
A5. There is no change to our policy of providing stable returns. At this time, we have not set aquantitative target for the payout ratio. We expect to achieve our three-year medium-termtargets this year, so we plan to increase the dividend. On the other hand, the new medium
term management plan starts next fiscal year (FY2024). In light of the TSE’s requirement ofactions to realize cost of capital and stock price conscious management, we will launch acommittee to establish the new medium-term plan this year. The committee will revisit thecapital policy and capital efficiency and discuss their disclosure.
Q6. In regard to the FIT scheme, what is the application deadline for biomass power
generation under 10 MW, and what is the forecast for orders received? Has there been
any last-minute demand?
A6. FIT applications for projects from 2 MW to less than 10 MW were taken until last fiscal year
(FY2022). We expect orders for the projects certified by the end of last fiscal year to beplaced in the current fiscal year (FY2023). FIT certification is still possible for projects inthe category of less than 2 MW.
Q7. Is it correct to say that about half of current profits are from recurring revenue modelbusinesses, as shown in the figure on page 39 of the briefing materials? Also, will theprofit contribution by these recurring revenue model businesses increase in the future?
A7. The graph in the figure is for net sales, but your understanding is correct. Recurring revenue
model businesses account for about half of overall net sales and profits. We believe thepercentage will continue to grow gradually.
Q8. What kind of customers have been ordering biomass power plants over the past fewyears?
A8. Over the past year or two, there has been a relatively high number of customers that operate
lumbering and forestry-related businesses that are knowledgeable about the procurement ofbiomass fuels. Fewer customers are using mainly imported biomass fuels.
Q9. Why were R&D expenses so much higher than normal? Also, do you expect further
increases next year and beyond as you pursue the long-term vision for FY2030?
A9. Expenses are expected to increase significantly, particularly because we are working on
various themes to establish decarbonization technologies, such as those for effectively
utilizing CO2 and for solid carbonization, and there are expenses for installing equipment for
2/3

experiments and demonstration. It depends on the progress made on each research theme, so
we can’t say that expenses will increase linearly across the board. However, we are diligently
working to achieve our long-term vision.
-END-

3/3