Takuma : Transcription of Financial Briefing for FY2023

June 12, 2024

TAKUMA Co., Ltd.

Transcription of Financial Briefing for FY2023 (ended 3/2024), held on May 24, 2024

＜Speaker＞

Hiroaki Nanjo, the President, Representative Director and CEO of TAKUMA Co., Ltd.

Thank you for taking time out of your busy schedule to join us today for TAKUMA's FYE March 2024 financial results briefing. My name is Hiroaki Nanjo, the President, Representative Director and CEO. Today's explanation will follow this table of contents.

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1. Financial Results of FY2023 (Ended 3/2024)

First, let's look at the consolidated results for FYE March 2024. Sales were up, but profit was down, with net sales of JPY 149.1 billion and operating profit of JPY 10.2 billion. The main factor for the decline in profit was a change in the EPC project mix in the Domestic Environment and Energy Business.

Orders received came in at JPY 160.5 billion due to decreased orders in the Overseas Environment and Energy Business and the Equipment and Systems Business.

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Meanwhile, the order backlog reached JPY 482.6 billion. This was mainly from steady orders for long- term O&M, such as municipal solid waste treatment plant (waste treatment plant) construction and operation projects, which currently account for around 55% of the order backlog.

In addition, ordinary profit was JPY 11.1 billion, and profit attributable to owners of parent was JPY 8.7 billion, both down from the previous year.

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The slide shows the analysis of variance in profit. The decline in profit was due to changes in the EPC project mix, increased depreciation at the new Harima Factory associated with operations, and increases in personnel and R&D expenses.

These are the results by segment. The details are provided on pages 7 to 18.

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2. Financial Forecast for FY2024 (Ending 3/2025)

Next, we will look at the forecast for FYE March 2025 results and shareholder returns. In terms of market conditions, we expect demand to remain strong, centered on waste treatment plant renewals and measures to extend their service life. The target for orders received is set at a record high of JPY 230 billion, exceeding the previous high of JPY 192.2 billion recorded in FYE March 2022.

We expect net sales to fall to JPY 143 billion, but due primarily to a change in the EPC project mix, operating profit, ordinary profit, and profit attributable to owners of parent will each be up at JPY 11.2 billion, JPY 12 billion, and JPY 8.8 billion, respectively.

Due to the nature of our business, plant construction progress varies from year to year. As such, there are also fluctuations in our performance from year to year, but the market environment is strong.

By expanding our human and other resources and continuing to steadily receive orders while focusing on recurring revenue model businesses, we believe we can continue to achieve sustainable growth.

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As for profit, although we expect an increase in expenses such as personnel and R&D expenses, we also expect an increase in profit due to higher gross profit on sales in the EPC Business and recurring revenue model businesses.

By segment, we are forecasting the figures you see on the slide. We will work steadily to achieve these targets.

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We will continue investing aggressively in human and other resources to achieve sustainable growth.

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As for shareholder return, we established a new quantitative shareholder return policy in the 14th Medium- Term Management Plan, which we launched in April of this year. Based on this, we plan to provide an annual dividend of JPY 56 per share in FYE March 2025, an increase of JPY 8 from the previous year.

In addition, as announced on May 14 this year, we will execute share repurchases totaling up to JPY 4 billion in FYE March 2025 and retire all shares purchased this fiscal year. We expect this to bring the total return ratio to 95.7%.

Under the 14th Medium-Term Management Plan, we will execute share repurchases totaling JPY 12 billion, including the JPY 4 billion this year. We expect the three-year cumulative total return ratio to be around 95%. I will go over the details in the explanation of the 14th Medium-Term Management Plan.

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3. 14th Medium-Term Management Plan (FY2024-2026)

Next, I will explain the 14th Medium-Term Management Plan, which we launched in April of this year.

The Takuma Group has established a Long-Term Vision, "Vision 2030", which culminates in 2030. Under this vision, 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 billion by FYE March 2031

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As you see on the slide, by promoting ESG management, we hope to achieve sustainable growth for our company and contribute to creating a sustainable society.

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