Takuma : 14th Medium-Term Management Plan (2024-2026)

Takuma Co., Ltd.

May 2024

Copyright 2024 TAKUMA Co., Ltd. All Rights Reserved.

Contents

1.	Takuma Group Management Principles and	P.2
Long-Term Vision
2.	Value Creation Process for Realizing the	P.3
Long-Term Vision
3.	Reflections on the 13th Medium-Term	P.4
Management Plan
4.	Business Portfolio (Our Vision for 2030)	P.7
5.	14th Medium-Term Management Plan	P.8
Positioning and Policies
6.	14th Medium-Term Management Plan	P.9
Financial Targets
7.	14th Medium-Term Management Plan	P.12
Business Strategies

8.	14th Medium-Term Management Plan	P.16
Strengthening the Management Foundation
9.	Management that is Conscious of Cost of	P.19
Capital and Stock Price
10.	Capital Policy	P.23
11.	ESG Initiatives	P.26

Copyright 2024 TAKUMA Co., Ltd. All Rights Reserved.

1

Takuma Group Management Principles and Long-Term Vision

Management Principles

Takuma will strive for social contribution, corporate value enhancement, long-term corporate development and the satisfaction of all stakeholders by providing goods and services that are needed and recognized as valuable in society.

We will address social and

environmental issues (ESG issues) through businesses that leverage the Group's strengths, viewing the resolution of these issues as an opportunity for growth,

while also increasing our company's economic value.

Vision2030

We aim to maintain our role of being an indispensable presence in society as a leading company in the field of renewable energy utilization and environmental protection and reach an ordinary profit level of JPY 20.0 billion.

Keywords for realizing Vision2030

A great partner to

our customers

Innovation of

technologies and

services

Solving issues faced

by our customers

and society

Copyright 2024 TAKUMA Co., Ltd. All Rights Reserved.

2

Value Creation Process for Realizing the Long-Term Vision

Copyright 2024 TAKUMA Co., Ltd. All Rights Reserved.

3

Reflections on the 13th Medium-Term Management Plan

Main Initiatives and Results

Rolling Out Business Activities Contributing to Solutions to

Issues Faced by Our Customers and Society

Strengthening the Management Foundation

EPC Business

(Japan)

Recurring

revenue model

businesses

 Municipal solid waste	7 orders received (Including primary equipment improvement)
treatment plants
 Energy plants	21 orders received (total power generation of 60 MW)
 Water treatment plants	9 orders received (order amount of at least JPY 500.0 million)
 Long-term O&M in	23 facilities	(Number as of end of March 2024)
operation
 Number of energy plants	65 facilities	(Since start of Japan's FIT program)
delivered

Securing and development of human resources

 Group employees 3,925 (FY3/21)

• • 4,278 (FY3/24)
• Enhancement of training menu and education system by rank and field
• Effective utilization of diverse human resources and improvement of job satisfaction

R&D, manufacturing capabilities, and digital

technology

• Development of carbon capture and utilization technology for realizing a decarbonized society
• Launch of operations at new Harima Factory and Supply Lab
• Development of digital technology for products and services to reduce manpower requirements at waste treatment facilities

Overseas Business

 Power retail business	GWh (Power supply in FY3/24)
	216
 Energy plants, etc.	4 orders received (2 in Thailand, 1 in Vietnam, and 1 in Taiwan)

Partnerships

 Participating in the C2X project and

collaborating with partners on

decarbonization solutions

Compliance

 Reexamination of safety management in

construction divisions and at operations

offices

Package Boiler/

Equipment and

Systems Business

• Recovery from decreased demand package boilers
• Semiconductor industrial equipment

JPY 16.8 billion in orders(FY3/22) ➡ JPY 18.6 billion (FY3/24)

3-year order amount of JPY 17.8 billion

	Investing in venture funds for strategic returns
 Looking into M&As to help improve corporate
	value
	(No results during period of 13th Medium-
	Term Management Plan)

 Ongoing educational activities

Municipal solid waste treatment plants	Biomass power plants	Biomass boilers/Hydrogen-firedvacuum-type water heaters	New Harima Factory
Copyright 2024 TAKUMA Co., Ltd. All Rights Reserved.		(Package Boiler)	4

Reflections on the 13th Medium-Term Management Plan

Numerical Targets and Results

Achieved the financial targets of

the 13th Medium-Term Management Plan

3-year total ordinary profit target	3-year total orders received (reference)
JPY 36.0 billion	JPY 36.4 billion	JPY 450.0 billion	JPY 521.3 billion

(JPY billions)												Ordinary profit		Orders received
Orders received (left axis)	Net sales (left axis)	Ordinary profit (right axis)	Ordinary profit		Orders received		JPY 36.4billion		JPY 521.3billion
	Ordinary profit	Orders received	JPY 33.6billion	JPY 517.2billion
250	JPY 31.9billion	JPY 468.0billion													16
		191.0		179.8				188.5		192.2		14.6				14
200		177.1	148.8							12
				12.3					168.5		160.5
							146.7			149.1
	9.6		11.6								142.6	10
							11.0
150		116.3	10.6	121.9	10.3134.4	10.6	134.0		11.1
99.9	113.0		118.1												8
100																	6
50																	4
																	2
0																	0
2015		2016	2017	2018		2019		2020	2021	2022			2023

11th Medium-Term Management Plan		12th Medium-Term Management Plan		13th Medium-Term Management Plan
Steady expansion in terms of both quantity and quality		Strengthening of corporate capability to facilitate steady growth		Preparation for further growth

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5

Reflections on the 13th Medium-Term Management Plan

Results by Segment

Although results fluctuate from year to year depending on the number of EPC projects and the timing of completion, orders received, net sales, and operating income have all remained strong.

12th Medium-Term Management Plan

(JPY billions)	Equipment and Systems 6%	Municipal solid waste treatment plants
		Package Boiler 13%			(Engineering, Procurement, and Construction)
					27%
Overseas Environment and Energy 1%		Net sales			Domestic Environment
		Water Treatment Plants, etc.				JPY 403.1			and Energy
							80%
6%					billion
							(FY2018-2020 total)
		Energy plants				Municipal solid waste treatment plants
						(after-sale service)
			20%
										27%
						FY2018	FY2019		FY2020		3-year total
	Orders received					179.8	148.8	188.5	517.2
		Domestic Environment and Energy		153.6	123.1	160.5	437.3
		Overseas Environment and Energy		0.7	1.3		0.8	3.0
		Package Boiler					17.4	17.9		17.5		52.9
		Equipment and Systems					8.5	6.7		10.1		25.5
	Net	sales					121.9	134.4		146.7		403.1
		Domestic Environment and Energy		93.7	108.1	120.7	322.6
		Overseas Environment and Energy		3.0	1.1		1.1	5.3
		Package Boiler					16.9	17.8		16.9		51.7
		Equipment and Systems					8.8	7.8		8.2		24.9
	Operating profit					11.6	9.6		10.4		31.6
		Domestic Environment and Energy		12.4	10.6	11.4	34.4
		Overseas Environment and Energy		0.1	(0.2)		(0.1)	(0.1)
		Package Boiler					0.9	0.9		0.6		2.5
		Equipment and Systems					0.3	0.3		0.8		1.6

*Adjustments omitted

Copyright 2024 TAKUMA Co., Ltd. All Rights Reserved.

13th Medium-Term Management Plan

(JPY billions)	Equipment and Systems 6%	Municipal solid waste treatment plants
		Package Boiler 12%			(Engineering, Procurement, and Construction)
					22%
Overseas Environment and Energy 1%		Net sales			Domestic Environment
		Water Treatment Plants, etc.				JPY 425.9			and Energy
							81%
7%					billion
							(FY2021-2023 total)
		Energy plants				Municipal solid waste treatment plants
						(after-sale service)
			22%
										30%
						FY2021	FY2022		FY2023		3-year total
	Orders received					192.2	168.5	160.5		521.3
		Domestic Environment and Energy		164.8	130.2	131.5		426.7
		Overseas Environment and Energy		2.0	5.9		2.2		10.2
		Package Boiler					16.8	18.4		18.6		53.8
		Equipment and Systems					8.9	14.3		8.4		31.6
	Net	sales					134.0	142.6		149.1		425.9
		Domestic Environment and Energy		108.6	115.9	119.1		343.8
		Overseas Environment and Energy		1.0	1.3		2.4		4.7
		Package Boiler					16.4	17.3		18.4		52.3
		Equipment and Systems					8.5	8.3		9.4		26.3
	Operating profit					9.9	13.8		10.2		33.9
		Domestic Environment and Energy		10.9	14.8	11.2		37.0
		Overseas Environment and Energy		(0.2)	(0.1)		0.1		(0.2)
		Package Boiler					0.6	0.9		1.1		2.7
		Equipment and Systems					0.6	0.8		0.3		1.8

*Adjustments omitted

6

Business Portfolio

Vision2030: Our Vision for 2030

Achieve further expansion with recurring revenue model businesses as the core driver of growth for Vision2030.

Work on expanding the EPC business at the same time as recurring revenue will increase to achieve ordinary profit of JPY 20.0 billion by FY3/2031.

Vision2030: Growth of net sales

13th MTP

14th MTP

15th MTP

Vision 2030

(JPY billions)		Ordinary profit
		JPY 20.0 billion
	Ordinary profit	ROE at least 12.0%
Ordinary profit	JPY 14.0 billion	200.0
ROE at least 9.0%
JPY 11.1 billion		13.0
ROE 8.3%	165.0
149.1	22.0
11.8	10.0
9.4	19.7
18.4	4.0	70.0
2.4

	Share
Equipment and Systems Business	6.5%
Package Boiler Business	11.0%
Overseas Environment and Energy Business	5.0%

Expand primarily in Thailand, Taiwan, and emerging countries, developing it into a pillar of the Group's business

Positioning

Ongoing business

(Steady expansion of revenue)

Ongoing business

(Steady expansion of revenue)

Future business

(Medium- to long-term perspective)

56.3	62.0
62.8	68.0	85.0
FY3/2024	FY3/2027	FY3/2031

Domestic Environment and Energy Business

EPC	Maintain and expand position
Business	as a leading company
Recurring	Further expansion as a core
revenue model
businesses	driver of growth

77.5%

35.0%

Core business

42.5 Growth business

• (Growth driver)

*Adjustments omitted	7
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14th Medium-Term Management Plan

Positioning and Policies

Challenges for achieving Vision 2030 include a lack of human resources. In the 13th Medium-Term Management Plan, we paved the way toward growth to resolve these challenges by assessing the business environment and strengthening recruitment. The 14th Medium-Term Management Plan is positioned to materialize the growth story for realizing the vision by prioritizing investment of management resources into receiving orders for municipal solid waste treatment plants (renewals and primary equipment improvement) and establishing a revenue model that maximizes the use of recurring revenue while formulating and implementing measures to solve various challenges.

	13th MTP	Planting seeds	14th MTP	Development	15th MTP	Obtainment	Vision 2030
Orders received
Net sales	Preparation for further growth	Materialization of the growth story			20.0
Ordinary profit

(JPY billions)

	14.6	11.1	230.0		14.0		Obtaining		200.0
192.2		180.012.0
	160.5	12.0	190.0
10.6	168.5		152.0	165.0		results
149.1	143.0
134.0	142.6
2021	2022	2023	2024	2025	2026	2027	2028	2029	2030

Business	Further strengthening of existing
Strategy	businesses
Addressing future changes in the
	environment
	Management foundation enhancement

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Basic Policy

1. Maintaining and expanding our market position in the EPC Business
2. Establishing a revenue model that fully utilizes recurring revenue
3. Steadily expanding revenue in the Package Boiler Business and Equipment and Systems Business
4. Building a track record for the future in international business
5. Promoting strategic M&As and creating new businesses

1. Securing and development of human resources
2. Knowledge management
3. Compliance and risk management

8

14th Medium-Term Management Plan

Financial Targets (Summary)

In addition to ordinary profit, new targets for orders received and return on equity (ROE) are set in the 14th Medium-TermManagement Plan.

: Main target

	13th MTP
(JPY billions)	( 3-year total)
Orders	521.3
received
Net sales	425.9
Operating	33.9
profit
Ordinary	36.4
profit
ROE	8.3%
	(FY3/2024)
ROE = Profit / Equity capital

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14th Medium-Term Management Plan

3-year total	FY2024	FY2025	FY2026
600.0	230.0	180.0	190.0
460.0	143.0	152.0	165.0
35.6	11.2	11.2	13.2
38.0	12.0	12.0	14.0
at least 9%	8.0%	8.0%	9.1%
(FY3/2027)

9